The crisis dejour – historically, real estate markets have experienced a crowd mentality. The more heated a market gets, the more individuals want to jump in, and the higher the prices are pushed up.

This social experience has occured throughout history and the cycles can be studied consistently. Professor Greg Watson teaches entrepreneurship and the role in the market economy. Regardless of whether we want to think about recent real estate markets which have Burst, these fluctuations are not unique. They have regularly occurred throughout time.

One of the most talked about historical markets that broke was Amsterdam’s Tuplip economy. We can consider the Tulipmania of the tulip market that burst in 1637 as a popularly known historical account of a economy that overheated.

Tulips were originally brought from Turkey in the early 16th century. As new “varieties” of tulip bulbs were introduced, competition intensified and their value soared. One honestly rare variety was the Semper Augustus which reached prices in excess of 1,000 florins per single bulb in 1623. That price exceeded more than six times the average annual income.

This industry mania continued – and ten years later the value had increased another ten times. At the market peak, the value of a single Semper Augustus tulip bulb reached 10,000 florins – the equivalent of what it cost to purchase a house in the middle of Amsterdam at the time.

With time the market peaked and there was no-one remaining who still wanted to acquire these tulips at such high prices. Within months, the market price crashed and thousands of people were left in economic ruin.

Throughout history – we have witnessed similar bubbles reoccur. As the crowd continues to get more hyped, those contrary voices become less and less popular to be heard. Are any of the recent market bubbles any different? In modern times of PC speech, are the contrarian voices that speak up for character, ethics, and integrity any different? Throughout time, these contrarian voices have been demeaned and ignored. But the market for products and the market for ideas has a way of always correcting itself from the heat of the crowd – and those extremist views tend to have their bubbles burst as the neccessary correction occurs. Today’s market is no different.