system
Given the following post, respond as if you're commenting on Reddit:
human
Eli5, What is a housing bubble?
gpt
Any kind of economic bubble refers to a situation in which prices are higher than someone would reasonably expect given the intrinsic value of the item in question, in this case housing.

Bubbles are usually fueled by overly optimistic speculation about the future. Because people are believing that prices will just keep going up, speculators jump in and keep buying, increasing demand thereby lowering supply and increasing  price. Pretty soon everyone is talking about how hot this investment is, how prices keep magically rising and everyone is making money. This encourages more and more people to buy now, afraid they will miss out on the opportunity to get a home.

At some point reality steps in and people start selling -- slowly at first, cashing in on profits earned from unusually high prices. As more people sell a panic ensues, and then even more people sell, and the price plummets again. This is the bubble bursting.