Don’t Make the Mistake of Living in a Negative (Housing Market) Environment
When it comes to the housing market, dwelling on negativity can be a costly mistake. Despite the media’s tendency to highlight doom and gloom, the truth is that the real estate market is thriving.
It’s important to know the difference in median sales price and average sales price when studying today’s housing market. A lot of the articles I have read lately focus on a drop in home prices, citing the median sales price. And while the median sales price has slightly declined, all this means is that more home sales are transacting below the median line.
2021 was the best year in the history of real estate, and during the first half of 2022 we were on the same track. Now the days of 2-3% mortgage interest rates are gone, and of course that means less buying power. So more transactions below the median line just makes sense.
By recognizing the distinction between median and average, we can avoid falling into the trap of assuming that property values are dropping. The opposite is true. We will likely end the year at a 4-7% increase in home values. That is far from bad news for homeowners!
Humans are wired to pay more attention to negative news due to an evolutionary bias. Our ancestors needed to be hyper-aware of potential threats to survive. With the percentage of negative news stories being approximately 90%, it seems that we still prioritize the negative in the modern world. However, it’s crucial to recognize that this bias doesn’t serve us well in the context of the housing market. Focusing solely on negative news can prevent us from seeing the opportunities and growth that exist.
2021 was the best year in the history of real estate. 2023 is looking to be the 3rd best year in the history of real estate!