In what phase of a real estate bubble do investors show heightened enthusiasm and speculation?

In the expansion phase of a real estate bubble, investors exhibit heightened enthusiasm and speculation. During this period, prices begin to rise rapidly due to increased demand, often fueled by optimistic market sentiment and a belief that property values will continue to climb. Investors may engage in more aggressive buying due to the potential for high returns, expecting that they can sell the properties at an even higher price in the future. This surge in activity is typically characterized by speculative investments, wherein individuals purchase properties not merely for personal use or as long-term investments, but with the intention of flipping them for quick profits.

As the bubble grows, the enthusiasm can lead to irrational behavior, where market fundamentals may be overlooked in favor of the allure of easy profits. Investors might disregard risks associated with a potential downturn because they are swept up in the prevailing optimism surrounding the market.

The other phases mentioned each have distinct characteristics that do not align with the heightened enthusiasm and speculative nature of the expansion phase. In the crisis phase, for instance, panic and fears of declining values dominate the sentiment, leading to a withdrawal from the market. The peak phase marks the top of the market where growth begins to stabilize but does not exhibit the same level of enthusiastic speculation. Finally, the recovery phase generally reflects a return