In a housing market with self-reinforcing price expectations, there are two stable price levels (a low one and a high one) and an unstable 'tipping point' price in between. If the market is currently at the low stable price level and experiences a temporary positive price increase that is not large enough to reach the tipping point, the market will eventually settle at the high stable price level.
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Consider a housing market where price movements are influenced by self-reinforcing expectations, leading to two possible stable outcomes: a low price level and a high price level. Between these two stable levels exists a single, unstable 'tipping point' price. If the market is currently at the low stable price level, and a large, temporary positive shock pushes the price to a level just above the tipping point, what is the most likely long-term outcome for the market price according to this mode
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