The Real estate bubble in the USA or the United states housing bubble affected over half of the US. A real estate bubble is a boost in housing prices fed by demand, enthusiasm, and speculation. At some point, the demand decreases at the same time supply increases, which results in drops of prices.  The price of housings peaked in 2006 and started to decline in 2006 and 2007. The price dropped to very low levels on 2012.

Real Estate Bubble

On 30 December 2008, the largest price drop in its history was reported by the Case-Shiller home price index. The credit crisis emerging from the burst of real estate bubble is the prime reason for the credit swap bubble of the 2007-2009 Recession in the U.S.

The Recession of 2007-2009:

A private group of leading economists who form the National Bureau of Economic Research announced that the United States is in recession for a year, in December 2008. The primary cause for the recession was a drop in housing prices that commenced in the year 2006. This sudden decline in prices had an absolute impact on the share markets.  The recession of 2007-2009 was one of the worst recessions in the history of U.S. since The Great Economic Depression.

An economic bubble is hard to identify. Several economists argued that a housing bubble existed in U.S. led by numerous economic and cultural factors. Professor Shiller published a book “Irrational Exuberance” in March 2000. The book covered the complete causes and effects of the housing bubble.

Political and economic analysts, G. Edward Griffin, predicted the burst of the housing bubble in his book, The Creature From Jekyll Island.

 Jeffery Robert Hunn, an Economist, and professor wrote:

“We can profit from the collapse of the credit bubble and the subsequent stock market decline.   However, real estate has not yet joined in a decline of prices fed by selling. Unless you have a very specific reason to believe that the real estate will outperform all other investments for several years, you may deem this prime time to liquidate investment property.”

Conclusion:

There is a strong inter-relationship between development in the premium house price gap and a drop in the stock of trade homes. The housing divisions are associated. The more prime prices rise, the less likely existing trade-up house owners will exhibit their house on the market.