Almost every week now, someone calls or emails me to ask about the real estate market in Kansas City. Too many times I find they’ve been listening to the news media and have skewed information. I typically begin with, “Let me ask you this; do you believe everything you hear on the news?” Most of the time their response is a resounding, “No!” My response is always the same. “Well then don’t listen to the evening news about real estate either.”
Honestly, I think most of the problem is that Americans only see the headlines and don’t bother to actually read the full article or try to understand the information. We hear little sound bites that are almost always negative and we don’t take the time to research it further. Here’s a headline from CNBC that I saw this morning, “U.S. Housing Starts Drop to 13-Month Low.”
What exactly are “housing starts” and why are they important?
Housing starts is an economic indicator that reflects the number of privately owned new houses (technically housing units) on which construction has been started in a given period. This data is divided into three types: single-family houses, townhouses/small condos, and apartment buildings with five or more units. New housing starts are also considered a leading indicator of the overall economy. If housing starts rise, it means builders are optimistic about the demand in the near future for newly constructed homes. If housing starts fall, builders are getting cautious. That’s a sign that home sales are slowing, or at least that builders fear they soon will.
This article goes on to say that US Housing Starts are at a current level of 1.575M in the United States, down from 1.576M one year ago. Yes, technically they have dropped, as the headline would indicate, but only 1% from one year ago. Ironically, just last month housing starts were higher than analysts expected, but I sure didn’t see the news media reporting on that.
Having said that, Housing Starts data is one of the indicators to watch. It’s important because the housing industry accounts for about 27% of investment spending in the United States and 5% of the overall economy. People spend big money not only on their homes but also on what goes in them, which means that housing data can be a leading indicator of economic activity months in advance. Sustained declines in housing start to slow the economy and can push it into a recession. Likewise, increases in housing activity trigger economic growth.
My point is, to read the data, not just the headlines. I recently read a quote by Tracy Morgan that said, “Bad news travels at the speed of light; good news travels like molasses.” I guess that’s why the news media is always pitching bad news.
Information is all relative too. I know quite a few real estate agents that are hurting right now and not making any sales, but in June 2022 my team had our third best sales month in 17 years. And just last month in September 2022, we had our very best month ever with $4.7 million in sales volume! If you really want to know what’s going on in real estate today, I guess who you ask could be just as important.
Personally, I think this is an excellent time to sell or buy a home. We still have a shortage if available inventory and it’s still a seller’s market. It’s just been so nuts these last two years that by comparison, it may not feel like it. Most homes are still selling in less than two weeks if they’re priced correctly.
If you have any real estate questions, please do not hesitate to call me at 816-651-9001 or one of my experienced team members. We would be happy to speak with you.