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Internet searches for “real estate market crash” hit an all-time high amid the fastest mortgage rate increase in history.
Mortgage rates are surging above 7% after hitting 6% only a few weeks prior, meaning that the cost of buying a home is now much higher than an exact-priced home would have cost at a 3% interest rate earlier this year.
In other words, there’s now a lot less home buyers, causing home prices to stall or even decline in certain areas.
If the job market declines, people could end up losing their homes to the banks because there’s not enough buyers – unless, of course, major corporations benefitting from Fed policies swoop in and buy up houses, which won’t help buyers.
Additionally, people who are already “house poor” cannot refinance their homes due to the skyrocketing rates; in fact, home refinancing is now at a 22-year low.
For now, home owners who financed with lower interest rates are trying to ride out the storm, but a real estate crash could mean the loss of their equity, much of which was fueled by the Covid home-buying bonanza.
“Two earlier Google search trends revealed the sentiment market participants feel in the last month, with one related to the recession and the other on selling their house,” Finbold reported. “Now, a third worrying Google trend emerged; the search volume for ‘real estate market crash’ skyrocketed by 284% in the US as of September 2022, the highest in Google Trends history.”
“This comes in the light of ever-increasing mortgage rates and a price drop in US housing for the first time in a decade.”