In 2021, an article on barrons.com described the rapid increase in housing prices during 2020 and 2021 that some economists thought might be unsustainable. The article quoted an economist at the Federal Reserve Bank of Chicago as arguing that unlike during the mid-2000s, in 2020, “we didn’t have a housing bubble.”

a. What is a “housing bubble”?

b. Why might it be difficult to identify a housing bubble until after the bubble has popped?

c. Should government policymakers generally be worried about a housing bubble starting? Briefly explain.