Sunday, September 26, 2021

Bubble watch: House-price concerns mount in big-profit states

“Bubble Watch” digs into trends that may indicate economic and/or housing market problems ahead.

Discussion: Google searches for the term “housing bubble” are commonly performed in western states, where home prices have increased over the past year.

Source: My trusty spreadsheet analyzed Google Trends data — ranking 39 states for intensity of “housing bubble” searches over the past 12 months — then compared those results to home-value changes from the Federal Housing Finance Agency — through June. One year’s profit and last four years’ annual profit. Google didn’t have Trends results for 12 states.


When 39 states were ranked by relative frequency of “housing bubble” searches, the 13 states at the top of this concern — 11 west of Mississippi — had larger recent price gains than the 13 states at the bottom of this ranking.

The average one-year price gain through June was 21.1% in the most concerned states, compared to 15.6% for the bottom 13. Interestingly, the gap between profits was nowhere near as wide in the last four years. The 13 states most worried saw an average gain of 6.7% versus 5.8% for the states with the least panic.

If the finding parallels concerns, these results suggest that home value concerns may be linked to a rapid increase in appreciation rates: gains in the most concerned states averaged 14.4 percentage points over the previous year versus 2016-2020. Jumped up. Compare this with a jump of 9.9 points in states with less concern.


The homebuying binge of the pandemic-era apparently prompted some house hunters to do some research on the increased risks. Let’s look at the state-by-state extremes.

California had the sixth largest “housing bubble” search share in the past 12 months. The statewide price increase of 20.2% in 12 months (number 7 out of 39) was a huge jump from the 2016-20 annual average of 6%, which ranked 18th in the previous four years. This translates to a profit margin of 14.2 points (number 7 out of 39).

Now consider the five places that have the most scrambling, as measured by their relative share of “bubble” searches. Focus on some of the hottest markets in the country, price wise…

District of Columbia: Its No. 1 Bubble Search share came in with a one-year price gain of 15.7% (No. 28) versus an average of 4.3% (No. 33) over the past four years – a difference of 11.4 points (No. 33). 19).

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Idaho: No. 2 is 37.1% (highest of 39) versus 11.6% (highest) with a one-year gain of the last four – a difference of 25.5 points (again, No. 1).

Washington: No. 3 21.9% (No. 5) vs. 9.2% (No. 2) with a one-year gain of the last four – a difference of 12.7 points (No. 11).

Oregon: No. 4 with a one-year gain of 20.4% (No. 6) versus 6.5% (No. 13) for the last four – a difference of 13.8 points (No. 8).

Arizona: No. 5 with one-year gain of 23.9% (No. 3) vs 8.1% (No. 5) last four – a difference of 15.8 points (No. 5).

Next thought, places with less panic – the five states with fewer bubble searches had a more modest price advantage…

Kansas: The smallest share of bubble searches came with one-year price gains of 16.3% (No. 23) versus 5.2% (No. 27) over the past four years – a difference of 11.1 points (No. 21).

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Iowa: 11.5% (No. 38) versus 4.1% (No. 34) with a one-year gain of the last four the second smallest – a difference of 7.4 points (No. 38).

Missouri: Third-small one-year gain of 16.6% (No. 19) versus 6.1% (No. 17) of the last four – a difference of 10.5 points (No. 24).

Louisiana: Fourth-smallest one-year gain of 9.6% (lowest out of 39) versus 3.1% (number 38) for the last four – a difference of 6.5 points (lowest out of 39).

Pennsylvania: 16.4% (No. 22) versus 4.9% (No. 30) with one-year price gains of the last four being the smallest of the five – a difference of 11.6 points (No. 16).

another view

Across America, fear has cooled. Searches for the “housing bubble” in May – as homebuying intensified – reached a level not seen since September 2016. Since then, the panic has subsided, with discoveries starting in early September.

how bubbly?

On a scale from zero bubbles (no bubbles here) to five bubbles (five-alarm alert)… Three Bubbles!

With all the housing hype in the industry, my perspective on consumer concerns has changed. If homeowners and home hunters are panicking, I still view such sentiments as a warning sign, with a twist – cheerleading for the apprehensive buyer to temper and perhaps a horribly hot market. Opportunity to cool off.

Jonathan Lancer is business columnist for Southern California Newsgroup. He can be contacted at [email protected]

Bubble watch: House-price concerns mount in big-profit states
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