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Can Google Trends Predict the Next Housing Bubble?
Google Trends provides a convenient window for real estate consumers to know their interests and concerns. And at this point, the potential housing bubble seems to be the biggest concern. Specifically, Google Trends shows that the search for the term housing bubble has been relatively constant for the past five years, even declining early in the coronavirus pandemic. But this spring, the search for term housing bubble surged
Spike for the term “housing bubble”
The spikes occurred especially in late March. Part of the surge simply reflects that more Boston condo buyers were looking while preparing to enter the market, as it was more or less in line with the beginning of the spring housing market. On the other hand, the search for the housing bubble hasn’t seen a similar surge in the last few years, so something unique must be happening here.
In addition, the surge seems to be in line with the release of a report from the Federal Reserve Bank of Dallas and media coverage of a report pointing out the unusual movements of the US housing market for the first time since the boom in the early 2000s. It found evidence of the brewing of the US housing bubble
A sharp rise in Boston condo mortgage rates
Another thing that happened almost at the same time as people were doing more bubble-related Google searches was a sharp rise in mortgage rates. According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage on March 3 was 3.76 percent. By March 31, the average had jumped to 4.67 percent. After that, the average continued to rise until May.
It’s not clear if there is a direct link between the rate of increase and the soaring Google search for bubble-related topics. The only thing I can say clearly is that both things happened at the same time. Still, it’s easy to imagine that buyers suddenly feel the pressure of rising interest rates and in some cases expect home prices to fall.
Google search traffic
On the other hand, the hypothesis that search traffic somehow reflects real-world trends in the light of growing search interest in the housing bubble is even more worrisome.
Other search terms further suggest that consumers are at least currently interested in where the housing market is heading. For example, when the search for housing bubbles surged, Google was also more interested in the term home price. And last August, a search for the term housing shift resulted in a short but meaningful surge.
The images that emerge from all this data are those in which consumers are still interested in buying and selling homes, even though they may seem worried about shifts and bubbles. This is an image that is mostly tracked in the latest economic analysis. For example, just a few days ago, Fannie Mae said that compared to median income, home prices now deviate significantly from historical standards than the peak experienced in 2006.
Economist housing forecast?
Fannie Mae economists in their latest economic forecasts show that current home prices are unsustainable compared to long-term fundamentals, and that home prices will continue to rise as interest rates rise. I think it suggests a strong downside pressure.
That said, Fannie Mae economists do not expect the 2008 housing bubble to repeat itself.
Earlier this month, Lawrence Yun, chief economist at the American Real Estate Agents Association, said the United States could face a very rare recession. Yun also considered concerns about the bubble and told real estate experts who weren’t in excessive debt, meaning that today’s situation is different from what led to the bursting of the bubble in 2008. ..
Zillow’s senior economist, Jeff Tucker, also recently expressed skepticism about the bubble, saying that the bubble story and the resulting fears could actually be a drag on the housing market. I hinted.
Tucker wasn’t talking about internet search traffic, but his point that chatter can affect the contours of the housing market is appropriate. And while it’s still unclear what will happen in the coming weeks, months, or years, there is no doubt that consumers are expressing more curiosity online about real estate market changes.
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Source Google Trends, Youtube
