What characterizes a "real estate bubble"?

A "real estate bubble" is characterized by rapid increases in property prices followed by a sharp decline. This phenomenon occurs when there is excessive speculation in the real estate market, often driven by factors such as easy credit, investor frenzy, or unrealistic expectations about future price increases. During the bubble, prices soar to unsustainable levels due to heightened demand and euphoria in the market. Once the bubble bursts, the inflated values cannot be maintained, leading to a sudden drop in prices. This cycle can cause significant financial distress for homeowners and investors who bought properties at peak prices.

The other options reflect more stable or positive market conditions, such as stable property prices, consistent demand for affordable housing, and slow, steady appreciation. These characteristics do not capture the volatility and drastic fluctuations associated with a real estate bubble.