Depressed

DEFINITION of 'Depressed'

A state or condition of a market, product or security characterized by slumping prices, low volumes, and lack of buyers. "Depressed" usually refers to a prolonged period of low prices and activity. The term may also be used in the context of the broad economy, in which case it generally refers to recessionary conditions.

BREAKING DOWN 'Depressed'

A period of depressed prices for a market or security usually occurs after prices have run up, peaked and subsequently declined for a prolonged period. Prices may remain in a depressed state for months, if not years, depending on the extent to which they had rallied beforehand and the amount of over-capacity or excess supply.

As an example, the U.S. housing market was in a depressed state for a number of years from 2008 onwards, as excessive real estate speculation led to a housing bubble in the preceding years. When the bubble burst, millions of homeowners were forced into foreclosure, creating an excess supply of homes that lasted for years.

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