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A housing bubble is when housing prices are unusually high, spurred by high demand and low supply, investor speculation, and irrational spending.

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Several reasons contribute to these bubbles, including increasing economic prosperity, more mortgage product offers, low-interest rates, and easy credit availability.

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What could be the reasons people fear there could be a trend towards a housing market price fall?

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Reasons to Fear a Fall in Housing Market Prices

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The hot real estate market can be credited to the stay-at-home and work from anywhere culture of the pandemic.

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However, consumers are becoming increasingly concerned that real estate is experiencing a price bubble, which may lead to housing market prices falling.

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1. High Mortgage Rates

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According to Freddie Mac, the average 30-year mortgage rate is around 4.67%, the highest since 2018. The anticipation that the Federal Reserve will continue to hike interest rates is the main reason for the increase.

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2. Inventory Picks Up

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The cause of the present housing crisis in the United States is supply and demand and is a similar principle phenomenon that investors see in the opening range at the start of the stock market trading day.

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