What emotional response is commonly observed among investors during a real estate bubble?

During a real estate bubble, investors frequently experience a strong emotional response characterized by a fear of missing out on potential gains. This phenomenon occurs when property values are rapidly rising, leading many investors to feel a sense of urgency to get involved and secure their share of the profits. The perception that prices will continue to rise contributes to an environment where investors believe that not participating could result in missed opportunities for significant financial rewards.

This emotional state can drive irrational decision-making, where individuals may overlook fundamental market conditions and risks in their pursuit of potential profits. As a result, many investors may enter the market, further inflating the bubble. The fear of missing out can also lead to heightened competition among buyers, pushing prices up even more as people are eager to invest before they believe it is too late. This behavior is common during bubbles, as the excitement and optimism surrounding rising prices can overshadow caution and due diligence.