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Are Home Values Really Overinflated?

As a professional it is our duty to KNOW the market and where it is trending so that proper decision making can be made by our clients.

Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report.According to the report:

“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”

Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

However, at the same time, Zillow issued a press release which revealed:

“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

Here are two graphs that help show why home prices are exactly where they should be.

The first graph shows actual median home sales prices from 2000 through 2017.

Are Home Values Really Overinflated? | Keeping Current Matters

By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

Are Home Values Really Overinflated? | Keeping Current Matters

The blue bars on this graph represent where prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

Bottom Line

Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.

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LESSON LEARNED…

LESSON LEARNED…

I took my new bride (is it still a new bride or groom after eight months?  Maybe a better question would be…when are we not “new” bride and groom?) to Top Golf for our weekly date night.  We had gone out once before and she had done extremely well for someone who had never swung a club before.  In fact, it was amazing how she had maintained the grip, posture and swing through out.  She consistently hit ball after ball with great contact down the middle.  She was hooked and had a desire for more.  In fact on Valentines she got me a Top Golf gift card…so I would take her to Top Golf again!  LOL

A little background…I played collegiate golf for Sierra College for two years and then nearly seven years later I was recruited by William Jessup University to create a men’s golf program and be its first Men’s golf coach.  I was hired in 2007 and coached until 2012 when I stepped down to pursue building an international business…but that’s a story for another e-newsletter.

As we were out this 2nd time it became a little more apparent to Lexi that golf is a game that is learned over time and no one person on the planet has simply picked up a “stick” and excelled at the game without much practice and dedication.  She did not hit ball after ball down the middle this time (which is very normal – let’s face it, golf is the hardest game invented to master).  She got frustrated.  It seemed a lot more difficult and confounding this go-round.  I had made some suggestions to her as she was hitting.  She “tried” them, but once the “try” ended with a poor result it was quickly dropped with an, “it doesn’t feel right or I can’t do that, etc.”  In that moment as I expressed my frustration (not very kind and understanding on my part), I understood more clearly when people would say that husbands shouldn’t give lessons to their wives.  I get too focused on the lesson rather than just having fun; clueless to the fact that if she’s having fun, she’ll want to do it again with me.  It would be better for both if a 3rd party professional was hired.  One nugget of wisdom that came out of this experience (sadly, after the “discussion” of she wasn’t coachable wanting to do it her way, and I wasn’t very kind, nor very fun, etc. had calmed down) was the fact that we can be too much results driven rather than process driven.  Lexi was judging her shot as good or bad based on the result of the golf ball rather than the process of learning a golf swing.  I shared with her that the professionals who make millions of dollars do not hit every shot perfect or pure.  Sadly, because of television which cuts from one player to the next, only showing the amazing shots, we are left thinking that the pro’s don’t miss, yet those of us that have played the game at a high level can certainly attest, “the game is a game of misses.

Something hit me as I was trying to communicate to Lexi about the frustration she was experiencing.  I realized that she was basing her success or failure of performance by what the little white golf ball did and not on what the process of her swing development was.  I was looking at her swing, the mechanics – her grip, her stance, weight shift, etc.  I told her that what the golf ball did at this stage did not matter, that she would have many more bad shots than good, and that was perfectly normal.  What she needed to focus on were three things:

1) Believe what your coach is telling you. (true compliments/encouragement, “great swing, really good grip, great tempo on that one, etc.)

2) Do what the coach tells you to do even when it doesn’t feel good or right (how could a brand new golfer know what was right or wrong?).

3) Give yourself a break.  Golf is hard and it takes time to be good.  Be patient and enjoy the process.

Later that week Lexi and I were having a “discussion” and she let me know to stop looking at the result in the moment but rather to focus on “the process.”  Before the sentence had finished I realized she was right and I was stopped in my tracks!  No, not because she was right (she is right A LOT), but rather she had actually listened to her coach! 🙂

**Lexi and I met while attending Bridgeway Church in Roseville.  Her beautiful red hair flowing down in a soft wavy cascade called to me from the row in front.  We dated for a little over three years (yes I was scared, I had been married before and didn’t want to make a bad or wrong decision this time) and became engaged when I surprised her with a road trip to Lovers Point near Monterey on February 28th 2016.  We were married June 22nd 2016.  Having no kids prior, I now have three teenagers that I learn from daily!

DIAMOND CREEK in West Roseville, CA 95747 | Matthew Stewart Real Estate | Granite Bay | Rocklin

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The Matthew Stewart Real Estate Team stumbled onto Diamond Creek, much like many of its current residents.  Many were living in the San Francisco Bay Area and would come up to Roseville and Granite Bay for drives on gorgeous spring, summer, or fall days.  They would venture out to West Roseville, lured by all of the aggressive new home builder advertising, but along the way they would take a turn here or there and somehow end up in Diamond Creek along Blue Oaks Blvd and Woodcreek Oaks Blvd.  Once you find Diamond Creek – you love it!  With its many nature / greenbelt areas with walking and riding trails winding through out, and its award winning schools and parks, Diamond Creek is a phenomenal place to live.  Check out the informative video the Matthew Stewart Real Estate Team has created to learn more.  If you desire more information or private showings of homes located in Diamond Creek, Diamond Woods, or surrounding areas, including Granite Bay – contact Matthew Stewart directly at (916) 718-2979

 

DIAMOND WOODS – ROSEVILLE, CA 95747 | Matthew Stewart Real Estate | Granite Bay | Rocklin

 

 

 

Diamond Woods in West Roseville, CA 95747 is a hidden gem close to everything but far enough away from the hustle and bustle you sometimes forget you’re in the city.  With its spacious greenbelts and nature preserves, to its walking and bike riding trails, to its many community parks, Diamond Woods and Diamond Creek are very special.  Learn more in the video provided by Matthew Stewart Real Estate Team at Realty World American River Properties.

LIVE AND PLAY IN GRANITE BAY | Matthew Stewart Real Estate | Granite Bay | Roseville

 

 

 

Granite Bay is an amazing community.  A best kept secret if you will, but the word is getting out and Bay Area Residents are making their way up to South Placer County to live and play!  Learn more about this great area in the video provided by Matthew Stewart Real Estate Team at Realty World American River Properties.

To look at the possibilities of living in this dynamic area, contact: Matthew Stewart – (916) 718-2979

 

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