Real Estate Bubble Concern Spikes Among Searchers

jmiller · #1 (**permalink**) 08-01-2005, 03:55 PM

If you’re in the real estate market, then chances are business has been good. For many, it’s been so good that they’ve decided to quit while they’re ahead. Last month, Hitwise released a report that reflects that concern. Searches for the terms “real estate bubble” and “housing bubble” lit up all of the major search engines, jumping by 311 percent.

The week ending May 28, 2005, witnessed the sudden spike in interest (and interest-only loans for that matter), making it appear that fear over what the Economist called “the biggest bubble in history” coming to a sharp collapse is increasingly on the minds of those paying attention.

Shortly after, for the week of June 11, 2005, Hitwise reported that, in total, visits to real estate sites jumped 19 percent over the same period for 2004.

“[R]ecent Internet search activity suggests that some activity in the category is being driven by curiosity of rising property values and the possibility of a bursting bubble. Should we undergo a market decline, it will be interesting to see how site traffic and search activity correspond,” said Bill Tancer, Vice President of Research at Hitwise.

This isn’t the only noted concern of a bursting housing bubble. Experian-Gallup Personal Credit Index reported that 40 percent of those surveyed believe the housing bubble will burst within the next three years.

In the US, China, and Australia, where coastal and urban real estate prices have boomed in recent years, sources are already noting a sharp increase in discounted property—an indicator that demand is either going down or people are wising up. Urban areas in the US especially have experienced population decline due to astronomical real estate prices. More and more buyers are moving out of the city to get more for their money.

Coastal Mississippi, for example, which is ranked among the poorest areas of the US, has enjoyed a real estate boom as Floridian developers try to shirk rooftop property values.

Even well-known economists seem fearful for the near future of real estate. Douglas Duncan, chief economist for the Mortgage Bankers Association, told the LA Times in an article published on May 28, 2005, "I'm going to rent for a while,” referring to his plans to sell his home and move into an apartment.

Internet users with an annual household income between $60,0000 and $149,999 were the most likely to visit a real estate site. This group is also the most likely of income groups to invest in real estate.

In total, 25 percent of visits to real-estate sites originate directly from other real-estate sites; 22.1 percent from search engines; 8.1 percent from Web e-mail services; and 6.3 percent from portal home pages. Once on a real-estate site, 32.2 percent of visitors will depart directly to another real-estate site; 5.5 percent to a search engine; 4.8 percent to an online bank or financial institution; and 4.9 percent will go to a portal home page.

According to Hitwise, the top ten real estate sites by market share of visitors were:

1. Realtor.com (12.29 percent)
2. Rent.net (5.50 percent)
3. Homegain (3.06 percent)
4. Rent.com (2.68 percent)
5. Yahoo! Real Estate (2.02 percent)
6. RealtyTrac (1.80 percent)
7. REMAX Real Estate (1.70 percent)
8. Apartments.com (1.69 percent)
9. Century 21 Real Estate (1.68 percent)
10. MSN House & Home (1.42 percent)

kgun · #2 (**permalink**) 08-04-2005, 12:26 PM

Robert Prechter, specialist in mass psychology, at
http://www.elliottwave.com/
Related sites:
http://www.socionomics.org/
http://www.elliottwave.net/
http://www.socionomics.net/

wrote about it in the first edition of "Conquer the Crash" published in March 2002. In his book "At the crest of the tidal wave" published in 1995, he wrote about the IT-crash (I call it a correction) 5 years ahead of time. If he is 5 years ahead of time this time too, the correction in the real estate market shoud come around 2007.

Professor Robert Shiller have written about it in his 2005 version of http://pup.princeton.edu/titles/6779.html
"Irrational Exuberance", a term first launched by Alan Greenspan http://www.federalreserve.gov/boardd...6/19961205.htm

The first edition of this book were published (was it) 14 days before the march 2000 correction.

One thing is sure in my view. It is nearly impossible to predict when a "bubble" will burst, but if financial markets have deterministic, fractal form it will burst (the market will correct). These http://www.elliottician.com/showpage.asp?p=21 Australian people claim to have refined the "Elliott wave fractal" to a statistical version.

If you buy a "put option" on a real estate index tracking fund / stock before the market correts, you will earn some money.

Question: Can search engines be used to read / detect mass psychological phenomenons?

Kjell Bleivik
http://www.multifinanceit.com/
http://www.blognorway.com/

kgun · #3 (**permalink**) 08-04-2005, 06:15 PM

Important book:

http://www.sciencedaily.com/releases...1217073021.htm

The data are split into two different distributions, one for the body and another for the tails.

Sornette Archive:
http://www.safehaven.com/archive-37.htm

Related:
http://cowles.econ.yale.edu/archive/...-020729wsj.htm

http://www.housing-bubble.com/

Social mood in (secular) bear markets is not good. Ask Robert Prechter. That is about Mass Psychology. I am not clever enough. Is it deterministic? Help!

Some take Robert Prechters analysis as a "contrarian indicator". The last word may be said in 100 years:

http://home.broadpark.no/~kbleivik/

Kjell Gunnar Bleivik
http://www.multifinanceit.com/
http://www.blognorway.com/

dburdon · #4 (**permalink**) 08-04-2005, 06:19 PM

Guys,

get out of real estate. Last year, as at May, UK prices had risen by 22% in one year and 170% over 5 years. This in an era of 2% inflation. Guess what the bubble went pop.

In the short term prices took off as long term interest rates fell from 10% to 4%. But once the initial momentum was played out, the bubble popped.

kgun · #5 (**permalink**) 08-04-2005, 06:22 PM

and has a tent.

dburdon · #6 (**permalink**) 08-04-2005, 06:27 PM

God aften Kjell,
either you've ears like Jodrell bank or you spend all night playing on WPW.

I know you've got a maths background but what have tents got to do with it?

On the UK ppc scene about 6 months ago the top search terms were going for £15 per click. As the market deflated the top terms fell to £5. Today the MLR has been cut to 4.5% so mortgages will be back in demand. But in reality everyone realises the previous market trajectory was unsustainable,

kgun · #7 (**permalink**) 08-04-2005, 06:36 PM

"Guys,

get out of real estate".

Some more math before I go to bed:

http://www.webmasterworld.com/forum108/163.htm

"And they don't have the time to seek out a good provider either, so they go to the largest, most convenient source.

I sometimes like to use models from physics to describe human behavior. In this case, I'd draw a rough analogy with the principles of gravitational attraction....

f =G(M1M2/d2)

"f" is the force of gravity
"G" is the gravitational constant
"M1" is the mass of object 1
"M2" is the mass of object 2
"d" is the distance between the two objects

...ie, the force of gravity between two objects is proportional to the product of their masses, and inversely proportional to the square of the distance between them.

To get a given force, "f"... if M1 is very small, then M2 must be very large.

Similarly, as the distance between the objects increases, for a given force, the product of the masses has to go up exponentially. If M1 is very small and "d" is large, then M2 needs to grow huge to attract M1. I won't belabor this, and I may not really be saying anything new, but I think it's a helpful view".

Adam Smith studied Newton intencely as far as I know.

Sometimes it is about moving money between markets.

Moving money, may mean "moving overvaluation" from one to another market.

Kjell Gunnar Bleivik
http://www.multifinanceit.com/
http://www.blognorway.com/

dburdon · #8 (**permalink**) 08-05-2005, 03:31 AM

Kjell,

the pay per click rates I was quoting were for real estate type keywords. The most expensive in the UK is generally "impaired credit mortgage". This is the term that was going for £15 ($25) per click.

The UK property market began deflating about last August. The knock affect has reached Spain, where in 2003/4 40% of new houses were sold to Brits. These has withdrawn equity from their UK properties and bought up the Costa Del Sol.

Yesterday the UK base rate was cut 25 basis points to 4.5%. But IMO it still won't stimulate the market. The market needs a 20-30% downward readjustment.

kgun · #9 (**permalink**) 08-05-2005, 05:52 AM

Have a nice day.

My Grandfather: Good for UK.
My father: Whaler on English ships. I think he had a nice time in the Antarctic. Perhaps better than sitting here in front of the screen speculating.

Do you have any relation to Spain, since you mention it in between? The Spanish armada visited Norway in the 1500 - 1600, and we see it even today, some darkskinned people from Western Norway, like people with read hear from Irland, an inheritance from Danish and Norwgian vikings (but not kings).

The earth is still round or was it spherical? My son say the a pancake is round, but flat.

What goes up must come down, but the inflation rate is still > 0.

Stop there for this post, if ...

Kgun