What Actually Happened in Real Estate While the Headlines Were Being Loud

The news loves the scary stuff. The alarming headlines. The worst-case interpretations of every data point that touches the economy or the housing market. But this week while the headlines were generating anxiety the housing market quietly delivered some genuinely good news worth paying attention to.

New Home Starts Went Up

After two months of slowing down new home starts increased this week. That matters because construction activity is a direct signal of what builders are seeing in the market. Builders do not start homes they do not believe buyers will purchase. When starts rise after a period of slowing the signal is that buyer demand is holding up well enough to justify getting back to work.

People are still buying. The market is not frozen. The activity is there.

Home Values Kept Climbing

Home values continued their upward trajectory this week growing at approximately a 3 percent annual pace. As Dave Weston at the Dave Weston Group explains that number is more meaningful than it might initially appear when you translate it into real dollars.

On a $500,000 home a 3 percent annual appreciation rate produces approximately $15,000 in new equity over the course of a single year. That equity accumulates whether the homeowner is paying attention to it or not. It builds through appreciation without any additional action required beyond owning the home. For buyers who have been on the sidelines waiting for conditions to feel more certain that $15,000 represents the cost of one year of waiting measured in equity that did not build.

The One Complicating Factor

Oil prices moved higher this week because of events overseas and elevated oil creates inflationary pressure that can make things bumpy for mortgage rates in the near term. That is real and worth monitoring.

But it is one factor in a picture that also includes a labor market where people are still working, homeowners who are still building wealth through appreciation, and a market that is still generating genuine opportunities for buyers who are prepared to act when those opportunities appear.

What This Means for You

The headlines describe a market that sounds frightening. The actual data from this week describes a market where new construction is picking back up, home values are growing at a pace that produces real equity for owners, employment remains solid, and opportunities still exist for buyers and homeowners who are positioned correctly.

If you are wondering what all of this means for your specific situation give Dave Weston a call. Dave Weston with the Dave Weston Group is dedicated to helping homeowners build, protect, and transfer real estate wealth and is happy to walk through what this week's data means for where you are right now.

Sources

FederalReserve.gov
MortgageNewsDaily.com
CensusGov.gov
NAR.realtor
BureauOfLaborStatistics.gov