In this episode of pplpod, we break down the mechanics of a housing bubble—a phenomenon where house prices rise dramatically due to speculation before crashing just as suddenly. We explore different definitions of these market events, comparing Joseph Stiglitz’s view on "fundamental" factors against Hans Lind’s focus on price development patterns.

Join us as we examine the tell-tale signs that a market is overheating, using Robert Shiller’s famous checklist which includes media frenzies, public excitement, and "new era" theories to justify high prices. We also discuss other key indicators like the ratio of housing prices to income, vacancy rates, and the impact of loose lending standards. Finally, we look at historical data from OECD countries to understand how these credit-fueled bubbles impact the real economy and why the "wealth effect"  ...