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Every month, it seems, you hear about a real-estate bubble bursting somewhere in the world. Americans are in year six of the U.S. meltdown, long enough to make us curious: Are these others like ours? Or different? Is it all one big epidemic?

It's not particularly comforting to know that economists are asking the same questions. "People already are doing research on it. We'll be arguing about it for the next 10 years," says Stephen Malpezzi, a professor of real estate and urban land economics at the University of Wisconsin-Madison.

To learn more, we asked experts to compare the U.S. housing fiasco with those in Ireland, Spain, China, Australia and Brazil.

What makes a bubble?

The more-or-less simultaneous rise of bubbles in many countries is unprecedented. Previous bubbles tended to be local and isolated. Oil wealth in Texas, for example, or a shortage of buildable land in San Francisco might drive prices ridiculously high, particularly if the local economy was booming. But other cities stayed untouched.

Now, instantaneous communication, easy travel and interconnected global financial systems can make national or even global property markets feel local to investors looking to make a buck, says Robert Shiller, a professor of economics at Yale University. He warned early of a possible U.S. real-estate bust in his 2000 best-seller, "Irrational Exuberance."

As property markets from Phoenix to Majorca, Spain, heated up, not only resident homeowners but investors everywhere jumped in. "I think of a bubble as a social epidemic of sorts," Shiller said in a recent phone interview. "It spreads like a disease. Enthusiasm goes from one person to another."

In reality, though, real-estate assets aren't mobile. They're fixed in one location.

For a healthy economy, you can't have more houses than people to live in them. There's no hard-and-fast definition of a bubble, but telltale signs include:

  • Home prices that grow out of proportion to incomes. (Sustainable home prices are three to four and a half times buyers' incomes. Bubbles prices run seven or eight times greater than incomes, or more.)
  • Rents that skyrocket compared with incomes.
  • Home prices that soar while costs for land and materials remain flat.

Buyers also hold nonsensical expectations that prices will keep rising more or less forever. A hot market becomes a bubble when people buy even if they can't afford it, and their purchases have no financial justification. Bubble buyers panic that they might lose out, Shiller says.

Similar but different

Access to cheap credit by developers and consumers is a common theme among contemporary bubbles. From rents, sales, mortgages and construction to furnishings, home improvements and consumer spending of equity, housing adds up to about 20% of the gross domestic product in developed countries.

Experts point to governments' cracklike addiction to pumping up economic growth by stimulating housing markets. Largely that's done by keeping interest rates low.

In most recent bubbles, banks lent cheaply and often irresponsibly. "Credit was not priced according to the risk at all," says Marja Hoek-Smit, the director of the International Housing Finance Program of the University of Pennsylvania's Wharton School.

Yet despite the similarities, the causes of bubbles vary. Here's a look at the timing, gains and losses for five nations' housing bubbles:

 
 Bubble beganPrices peakedTotal gain*Loss from peak**
AustraliaQ4 1990Q4 2010153%7%
ChinaFebruary 2006May 201242%9%
IrelandQ3 1994Q2 2007213%30%
SpainQ4 1994Q1 2007125%27%
United StatesQ1 1993Q4 200652%28%
Source: Global Property Guide
*Prices adjusted for inflation / **As of June 2012

Looking at Australia

Home prices rose quickly in Australia during the 1990s. By the early 2000s, bubbles in Ireland, Spain, China and the United States had been launched, according to Global Property Guide, an international real-estate research site.

About 65% of Australians own homes, as in the U.S. But where cheap credit, speculation and easy construction loans inflated the U.S. bubble, Australia's housing market was fueled by too many buyers competing for too few homes, says Michael Lea, the director of the Corky McMillin Center for Real Estate at San Diego State University.

Aussies are mostly bunched up in six coastal cities with limited room for building, so the growing population creates a great demand for homes. Not everyone agrees that Australia's boom was a bubble. Home prices, as in the U.S., grew out of proportion to incomes but not as much as in, say, China or Spain.

Australian home prices hit a peak in late 2010. They've been falling gently, by 1% or 2% a quarter, like the current rates of decline in the U.S. but unlike the sickening quarterly plunges of 2% to 3% we endured in 2008.

The Australian government should get credit, Lea says. "The one country that acted proactively and pierced the bubble was Australia. In 2003 or 2004, they saw prices were too high, and they raised interest rates and headed it off."