Real estate bubbles can have devastating effects from "summary" of Irrational Exuberance by Robert J. Shiller
Real estate bubbles can have devastating effects on the economy and society at large. When the prices of homes escalate rapidly, driven by speculative fervor rather than fundamental factors, it creates a volatile situation that can lead to a collapse with far-reaching consequences. The bursting of a real estate bubble can result in a sharp decline in home prices, leading to homeowners being underwater on their mortgages. This, in turn, can trigger a wave of foreclosures and bankruptcies, causing financial distress for individuals and families. The ripple effects of these events can be felt throughout the economy, as consumer spending contracts and businesses struggle to stay afloat. Moreover, the aftermath of a real ...
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