Google jumps into CA housing market

Google has broken into the real estate industry.

Convinced that a big market still exists for bargain-seekers, the tech giant launched a mortgage calculator and recently debuted a new mortgage comparison feature. “Google predicted that nearly one in two borrowers still don’t shop around for their mortgage and set up the tool to help people make ‘more informed financial decisions.’ It said that it would be rolled out to more U.S. states after launching in California,” CNBC reported.

Disrupting real estate

The consequences could be substantial, increasing already hot competition among California sellers. Now, “people interested in the California real estate market can use Google to browse over 300 mortgages from more than 75 different lenders for their house hunting,” according to Time. “Note that Google is limiting its services to that of a broker, not a lender,” the magazine added. “In order for the service to be free to consumers, Google says it is ‘compensated by mortgage lenders’ without endorsing any lender in particular.”

For that reason, the company has tapped several big, recognized industry leaders for key partnerships. “Powering Google Compare for mortgages will be Zillow Group and LendingTree, both of which announced Monday that they will be partnering with Google to provide mortgage information to the search engine monolith,” Housingwire noted. “According to Zillow, lenders who use Zillow Group Mortgages for their marketing efforts will now have their rates, ratings and reviews prominently displayed on both ‘the world’s most popular search engine’ and ‘the most visited real estate media network in the country.'” LendingTree added that, “after users provide a few additional pieces of information, such as loan amount and home value, Google will display relevant mortgage rates from LendingTree and other lending partners.”

Burning up or burning out?

California’s real estate outlook has become increasingly complex. While some regions have experienced sluggish growth, if any, the housing market in many urban areas has been robust, and in Silicon Valley it has remained exceptional. “Speaking to members of the Silicon Valley Association of Realtors, National Association of Realtors chief economist Lawrence Yun likened Silicon Valley to Florence during the Renaissance period,” the San Jose Mercury News reported. “Is Silicon Valley’s housing market experiencing a bubble? Are homes prices overpriced? Yun admitted he does not know, but he believes the momentum will likely continue as Google, Facebook, Yahoo and other tech companies and start-ups here continue to grow, innovate and produce results,” the paper added.

Despite a surge of big technology investment in real estate in and around Los Angeles, the broader housing market in Southern California has not performed nearly as well. CoreLogic analyst Andrew LaPage said, “Southern California home sales lost steam in October, dipping more than usual from September,” according to CNBC. “Sales remain constrained by a tight inventory of homes for sale and lower affordability,” he observed. Even setting aside tech buying, Los Angeles real estate had been on a tear. “Tight inventory kept home prices on the rise,” with the city’s median home price climbing “5.8 percent from a year ago to $490,000,” CNBC noted. Eventually, a lack of inventory can slow markets even where sellers can turn a substantial profit.

The trend reflected a growing statewide challenge faced by those in the market for a home. “The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California during the third quarter of 2015 slipped to 29 percent from the 30 percent recorded in the second quarter of 2015, and was flat from the 29 percent in the third quarter a year ago, according to a new report from the California Association of Realtors,” The Business Journal observed. “According to the CAR report, home buyers needed to earn a minimum annual income of $98,350 to qualify for the purchase of a $487,420 statewide median-priced, existing single-family home in the third quarter of 2015.”