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“When will the housing market collapse?” Consumers ask

Colonial Manor Realty’s Rick Nazaro is interested in the driveway while waiting for a couple to enter a property to be marketed in a “managed” open house on May 2, 2020 in Revere, Massachusetts2 Talk to a person’s buyer.

Blake Nissen | The Boston Globe | Getty Images

The housing market has been hot for the past year, thanks to being at home and working from anywhere in the pandemic culture.

However, there is growing concern among consumers that homes are experiencing a price bubble and that the bubble may be ready to burst.

Last week, Google reported a search question, “When will the housing market collapse?” Last month it surged 2,450%. “Why is the market so hot?” Searches have doubled in just one week.

And the most obvious indication that the market may be in a bubble is that “how much more than the asking price for a 2021 home should be” jumped 350% in the same week. ..

There are many indicators of home prices, but Core Logic is the most timely focus, with February prices up 10.4% year-on-year. This is the biggest annual jump since 2006.

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Frankno Saft, Chief Economist at CoreLogic, said:

According to realtor.com, the number of homes for sale is about half that of this time a year ago. As a result, competition ignited before buyers were more likely to be involved in a bidding war.

Google’s question about overpayment is incompatible with Nothaft.

“I have to admit that I’m worried when I hear it. It worries me,” he said. “It’s an incoming idea because it means it’s an auction market.”

Earlier this month, 42% of homes sold above list prices, according to real estate agent Redfin. This was 16 points higher than in the same period last year.

Darryl Fairweather, Redfin’s Chief Economist, said: .. “Sellers’ asking prices may have begun to level off, with what seems to follow typical seasonal patterns so far.”

Fairweather believes that the decline in mortgage purchase offers is an indication that some people are dropping out of the market due to a shortage of affordable homes for sale. ..

If these trends continue, she said, it may mean that we are “not in the midst of runaway home price speculation or the housing bubble.”

Mortgage rates have risen and are now slowly moving, and as buyers hit affordable barriers, Nosaft expects annual home price increases to fall to the 3% range nationwide. He said he was. But all real estate is local.

A “for sale” sign near a housing group under construction in the Norton Commons area of ​​Louisville, Kentucky, Monday, March 8, 2021.

Luke Charlett | Bloomberg | Getty Images

“This means that in some markets prices will not rise at all,” Nosaft added. “Some markets seem to be right.”

According to Black Knight, home prices have risen by more than 10% annually in nearly 75% of the 100 largest US housing markets. Markets with the strongest price increases can be at greatest risk.

Many of them are in the western part of the Californian flock during the recent escape. According to Black Knight, among them is the city of Boise, Idaho, where prices are rising 26% each year. Spokane, Washington (+ 20%); followed by Ogden, Utah (+ 20%) and Phoenix, Arizona (+ 18%).

The slowest-growing cities for home prices are Chicago, Houston, New Orleans, Orlando and Pittsburgh, all single-digit rises.

“The hope that housing will enter the market in 2021 and ease pressure on prices seems to have been shattered so far,” said Ben Gravosque, president of data and analytics at Black Knight. He mentioned the decline in the new sale list in January. And February. “As interest rates rise and inventories continue to run short, it will be important to pay attention to both home and affordable indicators in the coming months.”

Homebuilders are slowly increasing production, and new government stimulus may be added to it. As the economy opens and more Americans are vaccinated, cities can see rebirth and remove some of the heat from competition in all its suburbs. So will the housing market collapse? It’s unlikely.

That would definitely be cool, but unlike the massive home collapse 10 years ago, mortgage underwriting is now so strict that most homeowners can afford to buy the house they currently live in. There is.

A fall in prices or a slight fall in some markets does not lead to a foreclosure crisis. Given the high demand for rent, investors are also quite heavy in the market, which should serve as a backstop for significant price declines.

“When will the housing market collapse?” Consumers ask

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