Today’s Wealth Creation Opportunity in Housing

Being able to articulate the financial opportunity that exists in homeownership is more important than ever, especially as media misinformation continues to spread doom and gloom about the housing market – and crashing home prices.

The reality is that national home price gains continue and in fact have reached new record highs, even in the face of high mortgage rates and rising inventory!

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.3% from April to May after seasonal adjustment, breaking the previous month’s all-time high. The 0.3% gain is the seasonally adjusted number, which considers the typically stronger appreciation seen during this time of the year. The non-seasonally adjusted figure showed that home values rose 0.9% in May alone.

Home values in May were also 5.9% higher than a year earlier, following a 6.3% annual gain in April. The deceleration in the annual reading was due to a larger home price appreciation figure from May 2023, which was removed from the rolling 12-month calculation when the figure for May 2024 was added.

S&P DJI’s Head of Commodities, Brian D. Luke, explained, “While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging. Our home price index has appreciated 4.1% year-to-date, the fastest start in two years.”

Luke also addressed the crucial question many prospective buyers have wondered about: Should I wait for rates to move lower before buying a home?

He noted that all 20 cities in their composite index have observed annual gains for the last six months as “the waiting game for the possibility of favorable changes in lending rates continues to be costly for potential buyers as home prices march forward.”

And Case-Shiller was not alone in their reporting, as home price gains have also been seen in the other major indexes across the country. CoreLogic’s Home Price Index showed that prices rose 0.6% in May after rising 1.1% in April and 1.2% in March, confirming it’s been a strong season for home values nationwide. Prices are also 4.9% higher when compared to May of last year.

In addition, ICE (formerly known as Black Knight) reported that national home values rose 0.3% in May after seasonal adjustment, with their index showing that prices are 4.6% higher than a year ago. The Federal Housing Finance Agency’s House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts, also showed that home prices were flat in May and are up 5.7% year over year.

The bottom line is that housing still proves to be one of the best investments for wealth creation. And it’s not too late for people to start building wealth through homeownership. As the famous Chinese Proverb says, “The best time to plant a tree was 20 years ago. The second best time to plant a tree is today.”

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By The MBS Highway Team

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