NEW YORK–Google is reporting the search question, “When is the housing market going to crash?” spiked 2,450% over the past month. Right behind it in popularity was the question, “Why is the market so hot?” with searches doubling in just one week.
The questions come as the mortgage and home markets remain white hot, leading to obvious concerns by many that the bubble is going to burst.
“And, in the most telling indication that the market may be in a bubble,” observed MSNBC: “’How much over asking price should I offer on a home 2021’” jumped 350% in that same week.
MSNBC noted there are various measures of home prices, but one of the most timely and watched is from CoreLogic, which showed prices up 10.4% in February year over year. That is the largest annual jump since 2006, the report pointed out.
Acute Shortage
“We’ve got an acute shortage of supply on the market for sale at the same time that record low mortgage rates are driving the appetite to buy by millennials and Gen-Xers,” said Frank Nothaft, chief economist at CoreLogic.
That Google question about overpaying doesn’t sit well with Nothaft, MSNBC reported.
“I have to admit I’m worried when I hear that. It does make me concerned,” he said. “That’s the mindset that comes in, because that means it’s an auction market.”
MSNBC noted that at the start of this month, 42% of homes were selling for more than their list price, according to real estate brokerage Redfin. This was 16 percentage points higher than the same period a year earlier.
“The housing market is more competitive than we’ve ever seen it, but a couple indicators are causing us to ask whether we’re nearing a peak in terms of how fast demand and prices can grow,” said Daryl Fairweather, Redfin’s chief economist. “Sellers’ asking prices may be starting to flatten in what so far appears to follow a typical seasonal pattern.”
It’s A Sign
Fairweather sees the decline in mortgage purchase applications as a sign that some people are dropping out of the market because there’s a lack of affordable homes for sale, MSNBC added. If these trends continue, she said, it could mean that we are “not in the midst of runaway home price speculation or a housing bubble.”
As mortgage rates rise, which they are slowly doing now, and buyers hit an affordability wall, Nothaft said he expects to see annual home price gains nationally cool to the 3% range.
MSNBC reported nearly 75% of the 100 largest U.S. housing markets saw annual home price growth of 10% or higher, according to Black Knight. Markets with the strongest price appreciation could be most at risk.
The Top Cities
Many of those are in the West, where Californians have flocked during the recent exodus. Those include Boise City, Idaho, where prices are up 26% annually, according to Black Knight. Spokane, Washington (+20%); Ogden, Utah (+20%) and Phoenix (+18%) follow.
Cities with the slowest home price appreciation are Chicago, Houston, New Orleans, Orlando, Florida, and Pittsburgh, all with single-digit gains.