With Home Prices Soaring, Shoppers Fear Buying at the Top of a Bubble
Google reported in April that the search question “When is the housing market going to crash?” had spiked 2,450 percent in the past month, according to Diana Olick of CNBC. “Why is the market so hot?” searches had doubled in just a week.
Since 2008, everyone has been on bubble watch. The price of anything goes up, for any sort of reason, and it’s deemed a bubble, soon to be popped. The large number of searches implies those shopping for a new home are wondering if they are walking into a trap. Home prices have soared and no one wants to buy at the top.
Olick wrote, “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.”
However, home construction over the past decade has lagged behind, as many builders went belly-up in the 2008 crash and large builders have managed inventories more carefully.
According to Freddie Mac the US housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand, wrote Nicole Friedman for the Wall Street Journal.
Natalie Campisi of Forbes explained, “The housing market has been struggling to keep up with demand since the 2010s, when the number of new homes built was slashed in half compared with the previous decade. As the demand for residential real estate has increased, the scarcity of home
Article from Mises Wire