How's The Real Estate Market? This is often the question when you are known as a real estate professional. Although the answer can depend on many variables, in general it is GREAT!
Some of the variables include: what type of real estate, what price point, what condition, the components, and of course the location. Many use the question as an ice breaker in social conversation. But when it is asked, there is always some mount of serious interest in the answer. So how can you get a general answer that has truth?
Each month, the National Association of Realtors® (NAR) posts it's research results on the NAR website. One of the interesting data points to look at is the Housing Affordability Index (HAI). This is the number which indicates how much income the average American home buyer has when compared to the price of an average home purchase.
For example, if the HAI is above 100, then the average American family has more than enough income to buy an average home. And conversely, if the HAI is below 100, then the average American family does not have enough income to buy an average home. The NAR arrives at the number by consistently tracking various criteria, and then they publish their findings on the National Association of Realtors® website at https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability-index .
This is a lagging indicator, because the report is two months behind in real time. However, the indicator is an interesting data point that many investors and economists keep an eye on for activity. When the index is up, the economy is strong. When the index is low (under 100) the economy needs help.
With all that is going on in the US, the economy around housing appears to be pretty strong. The current index number shows that the average American family should have no problem buying an average American home. Maybe the problem in some markets is not the ability to buy, but the lack of inventory of homes for sale. Even in some secondary markets, like Cape Cod where we work, the inventory is low when compared to previous years.
When reports that the economy is becoming negative are being circulated, take a look at the National Association of Realtors®' Housing Affordability Index and make your own assessment. If you know about the index, you will be able to better judge who has an educated opinion, and who does not.
Thanks for reading.