Which of the following factors usually contributes to a real estate bubble?

A real estate bubble is often characterized by a rapid increase in property prices fueled by high demand and speculation, rather than by fundamental economic factors. When investors engage in excessive speculation, they buy properties not for their intrinsic value or potential income generation but rather in hopes of quickly reselling at a much higher price. This speculative behavior can create a self-perpetuating cycle where rising prices lead to even more speculation, ultimately detaching the market from actual economic fundamentals such as income and demand.

High interest rates tend to have the opposite effect on real estate markets by making borrowing more expensive, which can dampen demand and slow down price increases. Stable economic growth contributes to a healthy real estate market but does not typically lead to bubbles. A decrease in population growth can also signal a reduced demand for housing, further counteracting conditions that would lead to a bubble. Therefore, excessive investor speculation is the primary factor that contributes to the formation of a real estate bubble.