This may be followed by decreases in home prices that result in many owners finding themselves in a position of negative equity—a mortgage debt higher than the value of the property. The underlying causes of the housing bubble are complex. Factors include historically low interest rates, lax lending standards, and a speculative fever. This bubble may be related to the stock market or dot-com bubble of the 1990s. This bubble roughly coincides with the real estate bubbles of the United Kingdom, Hong Kong, Spain, Poland, Hungary and South Korea.

Robert Shiller's plot of U.S. home prices, population, building costs, and bond yields, from Irrational Exuberance, 2nd ed.[13] Shiller shows that inflation-adjusted U.S. home prices increased 0.4% per year from 1890–2004 and 0.7% per year from 1940–2004, whereas U.S. census data from 1940–2004 shows that the self-assessed value increased 2% per year.

Bubbles can be definitively identified only in hindsight after a market correction, which in the U.S. housing market began in 2005–2006.

The mortgage and credit crisis was caused by the inability of a large number of home owners to pay their mortgages as their low introductory-rate (sub-prime) mortgages reverted to regular interest rates.