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The Cycle of Real Estate Development
When the real estate market is booming, it may appear that there's a housing shortage and there's a need for new houses. But if nine other home builders make the same assessment, then you may have 200 homes fill what was 100 homes of demand. People might not feel as prosperous and willing to buy and the demand for homes and turn may be lower. And third, this leads to asset prices rising, which encourages more activity,. further price increases, and a greater risk bearing upon market participants. Eventually the upward reinforcement is unsustainable before the cycle reverses back the other way.