Weekly Special | July 13, 2020

Real Estate Inflation Is Soaring

The most accurate method of tracking inflation in the real estate market is the tracking of median home values over time.

Most articles that comment on real estate focus on average prices, but that unfortunately results in a better gauge of what buyers are currently spending versus actual home value movement in the market. Average home prices are heavily influenced by mortgage interest rates as it significantly influences how much home a buyer can afford.

But median home values (the middle price per square foot of a large sample of existing home sales) is a far more stable method of seeing how the appreciation (inflation) in the housing market. We specifically exclude new home sales in order to see what the change in “used”

homes is doing, as new homes are strongly impacted by construction costs.

The graph below shows that the median home value has recorded an all-time high and is up a whopping 6.45% over last year’s median home value. Remember, we’re only 1/2 the way through 2020, so imagine where this inflation rate may be at year’s end.

The original one-page Weekly Special PDF is still available.