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Dictionary.com defines “bubble” as: “A price level that is much higher than warranted by the fundamentals. Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices.” So the question is, are we on the threshold of a housing bubble, or are we already in one?

Bubbles have been a fairly constant feature of global investment markets since human beings first began to trade. In modern history, they are identified with irrational investment activity in a stock market, followed by some type of crash in prices. The 1929 crash was obviously the result of a bursting investment bubble. More recently, the dot com “correction” (remember irrational exuberance?) has been viewed in retrospect as a wide-ranging bubble.

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