Searches for the phrase, ‘When is the housing market going to crash?’ are up 2,450% over the past month
The housing market is hot — but is it too hot?
Searches for the phrase, “When is the housing market going to crash,” are up 2,450% over the past month. Similarly, Americans are searching in droves for explanations about why the housing market is so hot and why home prices are rising, Google reported.
Americans’ concerns are perhaps a natural by-product of today’s extremely competitive market, economists said. “If we see prices rising as quickly as we have, for some people it might spark some memories of the last time around,” Matthew Speakman, an economist with Zillow ZG, 2.17% Z, 1.74%, said.
“After robust gains over the past five years, the nationwide nominal house price index is now 40% above its 2012 low-point and 4% above the peak reached in 2006. If 2006 was a historic bubble, then current price levels should be looked at more closely,” according to J.P. Morgan Research.
For some, today’s real-estate market might feel eerily similar to the market conditions that preceded the Great Recession. Given that the last housing boom triggered a global economic meltdown, these concerns are certainly understandable. But housing experts argue that Americans don’t need to get themselves too worked up — yet.
Fitch estimates that national home prices are approximately 5.5% overvalued. “Slowing employment recovery and still-high unemployment levels are not supportive of long-term sustainable price growth,” wrote Suzanne Mistretta, senior director at Fitch Ratings, said in a recent note.
“Slowing employment recovery and still-high unemployment levels are not supportive of long-term sustainable price growth,” she added.
And even the more optimistic forecasts from within the industry don’t see current prices lasting.
“We’re not going to see a crash in the housing market, but we are expecting some cooling on the really unsustainable growth rates that we saw, particularly in 2020,” said Robert Dietz, chief economist at the National Association of Home Builders. “When home prices are growing faster than incomes, ultimately that is an unsustainable trend.”
By Jacob Passy at MarketWatch.com