As home prices surge and consumers recall the last time the housing market was this hot, it’s no wonder that fears of a housing crash have begun to surface.
The question, “When is the housing market going to crash?” spiked 2,450 percent on Google searches in the past month and “Why is the market so hot?” searches doubled in just a week, according to a new article from CNBC.
The article stated that the question “How much over asking price should I offer on a home 2021” jumped 350 percent in Google search during that same week, suggesting the market could be in a bubble.
Of course, these search questions are coming from consumers, but even housing economists are beginning to voice their concerns.
“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,” CoreLogic Chief Economist Frank Nothaft told CNBC. “I have to admit I’m worried when I hear that. It does make me concerned. That’s the mindset that comes in, because that means it’s an auction market.”
A severe shortage of homes for sale, combined with low interest rates, is driving up demand and home prices and creating one of the most competitive markets housing has seen since 2007.
In 2020, independent mortgage banks made more money than ever on their originations, but the housing market could be getting so hot that it is locking many out of the market and risking overheating.
Real estate agents are sharing their experience about what it is like to be on the front lines of the hot market, and stories include paying up to $400,000 above asking price, waiving contingencies such as the appraisal contingency and constantly showing homes.
The latest report from CoreLogic shows home prices are currently growing at their fastest pace since 2006, rising 10.4 percent in February alone.
But some economists are still optimistic that the crazy patterns brought on by the pandemic will soon pass.
“The new listings trend over the past several weeks highlights the up and down path on the road to a more normal housing market,” realtor.com Chief Economist Danielle Hale said in a statement. “Strong buyer interest continues to far outstrip the availability of homes for sale. While this creates challenges for buyers who have to act fast and be prepared to offer a lot, these conditions put those who are considering selling their home this spring in a strong position.”