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re: Why were house prices going up like crazy during the housing bubble?
Posted on 9/18/17 at 7:26 pm to Langland
Posted on 9/18/17 at 7:26 pm to Langland
It's human nature. Speculative bubbles have been created and burst as long as investments/gambling have been around.
tulips and bubbles
Humans have an instinctive urge to take risks to acquire goods/power/money/whatever. As long as the objective continues to increase in value, people continue to buy it regardless of the cost if they expect the selling price increase further. It's not a question of whether the house is worth the asking price or cost or value, it's a question of whether the buyer believes the selling price will be higher in the future.
Stocks, houses, tulips, gold, or whatever have values based on what people think other people will pay for them later. As long as enough people believe prices will rise, they will.
tulips and bubbles
Humans have an instinctive urge to take risks to acquire goods/power/money/whatever. As long as the objective continues to increase in value, people continue to buy it regardless of the cost if they expect the selling price increase further. It's not a question of whether the house is worth the asking price or cost or value, it's a question of whether the buyer believes the selling price will be higher in the future.
Stocks, houses, tulips, gold, or whatever have values based on what people think other people will pay for them later. As long as enough people believe prices will rise, they will.
Posted on 9/19/17 at 7:48 am to Ole War Skule
quote:
It's human nature. Speculative bubbles have been created and burst as long as investments/gambling have been around.
This is the correct answer.
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