Back in early 2020, right as the coronavirus pandemic began sweeping the U.S., the number of Google searches related to mortgages spiked — a hint that in retrospect foreshadowed the so-called Great Reshuffling as people moved to greener pastures.
A year later, in spring 2021, and then again in spring this year, Google searches for the term “bidding wars” spiked.
But perhaps the most curious recent spike in Google searches was for a much more ominous term: “housing bubble.”
All of this is according to Google Trends, which lets users of the platform identify popular search terms. For example, you can plug the name “Will Smith” into the tool and see that Google searches for the actor skyrocketed right after he slapped Chris Rock at the Oscars. Google uses a relative scale when representing how many searches took place, so searches for Will Smith were hovering around zero for the last five years, but spiked to the maximum of 100 after the Oscars slap.
It makes sense that Google searches for Will Smith would spike after a high-profile incident. But Google Trends’ most powerful use is as a gauge of interest in other topics that have to compete for attention in a crowded marketplace. For example, Google Trends shows that searches for “Ukraine” went up when the war began earlier this year, but have since fallen — indicating the conflict is not capturing Americans’ attention the way it once was. That shift in attention was not obvious or a foregone conclusion.
In the same way, Google Trends offers a useful window into real estate consumers’ interests, concerns and fears. And at the moment, a potential housing bubble appears to be a top fear. Specifically, Google Trends shows that searches for the term “housing bubble” have remained relatively constant for the last five years and even dipped earlier during the coronavirus pandemic. However, this spring, searches for the term have soared.
The spike specifically took place in late March. That more or less coincided with the beginning of the spring market, so some of the spike may have simply reflected more consumers getting their bearings as they prepared to jump into the market. On the other hand, previous recent years did not see similar spikes in searches for “housing bubble,” so there must be something unique going on here.
Additionally, the spike appears to line up with the release of a report from the Federal Reserve Bank of Dallas — as well as media coverage of the report — that pointed to “abnormal U.S. housing market behavior for the first time since the boom of the early 2000s,” and which found evidence of a “brewing U.S. housing bubble.”
One other thing that happened about the same time that people were doing more bubble-related Google searches was a rapid jump in mortgage rates. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage on March 3 was 3.76 percent. By March 31, the average had jumped to 4.67 percent. The average then continued rising well into May.
It’s not clear if there’s any direct relationship between rising rates and spiking Google searches for bubble-related topics. All that’s possible to say definitively is that both things took place at the same time. Still, it’s easy to imagine buyers suddenly feeling the squeeze of rising rates and wondering — maybe hoping in some cases — that home prices would fall back down.
It’s also notable that searches for things like “mortgages” and “bidding wars” have roughly tracked with reality over the last couple of years. In the same way that searches for “Will Smith” reflected an actual news event, searches for real estate terms seem to reflect consumers’ attitudes about the market. Case in point, at the beginning of the pandemic, search interest spiked not just for the term “mortgages” but also for “home loan” and “mortgage calculator.” And the subsequent two years were a bonanza of consumers getting mortgages.
The hypothesis that search traffic reflects in some way real-world trends gets more worrisome, on the other hand, in light of rising search interest in a housing bubble.
Since March, search interest in the term “housing bubble” has fallen significantly from its high point. However, interest in the topic is still elevated compared to most of the recent past. During the week of May 8-14, for instance, search interest in the term “housing bubble” was higher than at any other point in the last five years with the exception of the huge spike in March.
The good news, though, is that when looking at searches for “housing bubble” all the way back to 2004 — the maximum range Google offers — today’s spike in searches doesn’t seem so bad. Indeed, 2005, when home prices were shooting up but the bubble hadn’t burst yet, was actually the high point for Google searches on the topic, with interest far eclipsing what’s going on today.
It’s important to reiterate here that of course Google searches about a housing bubble don’t cause bubbles, nor do they reflect hard or specific economic data. They’re a glimpse into a collective mood.
Other search terms further suggest consumers are at least curious right now about where the housing market is headed. Around the time searches for “housing bubble” were spiking, for example, Google also saw increased interest in the term “home prices.” And last August, there was a brief but meaningful spike in searches for the term “housing shift.”
On the other hand, some terms have been relatively steady over time. For instance, searches for the word “Realtor” have been cyclical with the market over the last five years, but overall haven’t seen major spikes or dips. Searches for the phrase “real estate agent” have followed a similar pattern but are actually higher now than they historically have been — a finding that one could extrapolate as evidence that people still want to work with agents.
Interest in the term “FHA” has followed a similar pattern, indicating real estate consumers are still researching loans that are geared toward first-time buyers.
Perhaps even more curiously, searches for “real estate commissions” are way down compared to their pre-Great Recession highs. Such a finding suggests that despite ongoing and highly contentious lawsuits over agent pay, and despite ever-rising housing prices, consumers are not particularly preoccupied with the costs of their agents or how those costs intersect with housing affordability.
The picture that emerges from all of this data is one in which consumers are still interested in buying and selling houses, even as there appears to be some anxiety about shifts and bubbles. That’s a picture that mostly tracks with the latest economic analysis. For instance, just days ago Fannie Mae noted that relative to median incomes, home prices are “now more deviated from the historical norm than the peak experienced in 2006.”
“We believe this points to the unsustainability of current house prices relative to longer-run fundamentals, and with rising interest rates this suggests strong downward pressure on continued house price appreciation,” Fannie Mae’s economists said in their latest economic forecast.
That said, Fannie Mae’s economists do not expect a repeat of the housing bubble of 2008.
Earlier this month Lawrence Yun, chief economist for the National Association of Realtors, said the U.S. could be headed for a “highly unusual recession.” Yun also weighed in on fears about a bubble, telling real estate professionals that “we’re not in an excessive debt situation” — meaning conditions today are different from the ones that led to the bubble burst of 2008.
Zillow Senior Economist Jeff Tucker also recently expressed skepticism about a bubble, but hinted that talk of a bubble and the resulting fear could actually be a drag on the housing market.
Tucker wasn’t talking about internet search traffic, but his point that chatter can impact the contours of the housing market is a relevant one. And though it remains to be seen what will happen in the coming weeks, months and years, there’s little doubt that consumers have been expressing more curiosity online about a shifting market.