‘When is the housing market going to crash?’
The housing market has been white hot for the past year, thanks to the stay at home and work from anywhere culture of the coronavirus pandemic.
But there is increasing concern among consumers that housing is experiencing a price bubble – and that the bubble may be ready to burst.
Google reported last week that the search question “When is the housing market going to crash?” had spiked 2,450% in the past month. “Why is the market so hot?” searches had doubled in just a week.
And, in the most telling indication that the market may be in a bubble, “How much over asking price should I offer on a home 2021” jumped 350% in that same week.
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.
“Any hopes of 2021 bringing an influx of homes to the market and lessening pressure on prices appear to be dashed for now,” wrote Ben Graboske, president of data and analytics at Black Knight, noting the drop in new for-sale listings in January and February. “With higher interest rates and a continuing shortage of inventory, it will be important to keep a careful eye on both home prices and affordability metrics in the coming months.”
Homebuilders are slowly increasing production, and new government Covid stimulus could add to that. As the economy opens and more Americans are vaccinated, cities could see a rebirth, taking some of the heat out of all that suburban competition. So will the housing market crash? Unlikely.
It will cool, no question, but unlike the great housing crash a decade ago, mortgage underwriting is very strict now, so most homeowners can afford the homes they’re currently in.
If prices chill or even drop slightly in some markets, it will not lead to a foreclosure crisis. Investors are quite heavy in the market as well, given the high demand for rentals, and that should serve as a backstop for major price declines.
Read the full CNBC article for more details and comment.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
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Andrew Oliver
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