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Dont Be Fooled by Remarkable Real Estate Headlines

Dont Be Fooled by Remarkable Real Estate Headlines | Simplifying The Market

Dont be impressed by the headlines reporting year-over-year housing numbers for the next several months (data covering March, April, May, and June). The data will most likely show eye-popping one-year increases.

While the year-over-year jumps will certainly be striking, consumers should take these numbers with a grain of salt, as the situation highlights a short-term quirk in the reporting of this data. Essentially, the increases will reflect a combination of two things: sharply lower housing numbers during last years virus-related market collapse and the subsequent strong rebound. This will result in what will appear to be unbelievable growth.

Lets use single-family home sales as an example:Dont Be Fooled by Remarkable Real Estate Headlines | Simplifying The MarketAs the graph reveals, last springs buying market was anything but typical. Instead of sales increasing, they fell sharply as a result of stay-at-home orders that virtually shut the real estate industry down.

This springs real estate market will bounce back with more normal seasonal sales increases. The percentage increase in sales will be astronomical not because sales have skyrocketed, but instead because they will be compared to last years low numbers.

Bottom Line

There are likely to be some sensational headlines about real estate over the coming months. However, dont be fooled. The actual story is that the real estate market is finally back to normal.

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