While news reports about a dip in the housing market abound, one economist says they’ve got it all wrong. Mark Fleming, chief economist at real estate insurance company First American Financial Corporation, recently wrote an editorial for The Hill urging “politicians, economists, and homebuyers” to take the media’s doom-and-gloom perspective “with a grain of salt—or better yet, the whole shaker.”
Fleming said part of the problem is the seasonality in the housing market, making one particularly cold slice of the calendar a poor choice to use as an indicator of overall market health. But he also criticized the media for assuming that rising housing prices are bad for buyers, when in reality, current home owners tend to move up when their home values go up, due to increases in their equity.
“More existing home owners have been able to sell their existing homes and purchase new ones. This has resulted in the positive signals that we’re seeing all around us in the housing market. To paraphrase the famous saying, ‘it’s the equity, stupid,'” Fleming wrote.
Source: “How not to interpret January’s housing data,” The Hill (March 4, 2015).