High Home Prices Hurt the Industry

Folks making a living from real estate ought to re-examine assumptions

The latest headline from Calculated Risk newsletter is a bit frightening: “NAR: Existing-Home Sales Decreased to 3.84 million SAAR in September, New Cycle Low.” Inside you find what is mostly reporting on NAR’s latest release about existing home sales.

There are many charts and I recommend reading Calculated Risk’s post but looking at that made me think of something. So I did a tiny bit of number crunching myself. I am not an economist, but I did stay at a Holiday Inn Express last night. Actually, I didn’t, but I don’t think these numbers require a Ph.D. to make sense of them.

The data suggests that high home prices, contrary to popular wisdom, hurt the real estate industry. Given that so many agents tell clients and prospects that the housing market is strong or weak based on the price, which then leads to lobbying efforts by NAR and others to keep home prices high, it might be time to rethink the entire template.

Let me explain.