Time To Panic? Statistically Speaking…

According to a recent National Association of Realtors report, the national median sale price posted its biggest annual drop in over a decade. This comes even as the supply of available properties sank to an all-time low. The year-over-year decline is the biggest since December 2011. Most media outlets are sounding the panic alarm regarding the housing market, signaling the start of a significant shift in real estate.

We will get back to the potentially “worrisome” figure a bit later, but I first wanted to share another statistic I have recently shared with friends and family. Research suggests that approximately 85% of what people worry about never actually happens. This concept, often referred to as the “Worry Principle,” highlights that a large majority of the things we anxiously fret over and imagine worst-case scenarios about do not materialize in reality.

While on the topic, here are some more interesting statistics that I discovered. Happiness and Income: High income improves evaluation of life but not emotional well-being. Beyond an income threshold of around $75,000 per year, increased income has minimal impact on an individuals’ day-to-day happiness levels. (Source: Kahneman, D., & Deaton, A.)

Self-Control and Success: Self-regulation strategies improve self-discipline. Individuals with high levels of self-control are 20% more likely to be successful in various areas of life, such as academic achievement and career advancement. (Source: Duckworth, A. L., et al.)

Finance in Relationships: When it comes to financial stress and relationships, approximately 88% of consumers have made impulsive purchases due to emotional reasons rather than practicality or necessity. (Source: CreditCards.com). Moreover, around 70% of couples report that financial stress significantly impacts their relationship, making it one of the leading sources of conflict. (Source: American Psychological Association.) In that regard, approximately 41% of Americans admit to hiding financial information or keeping financial secrets from their partners. (Source: CreditCards.com.)

Financial Education Only about 17% of American students are required to take a personal finance course in high school, leading to potential gaps in financial literacy. (Source: Council for Economic Education.) Meanwhile, peer Influence on spending relates that over 70% of people are influenced by their friends’ spending habits, leading to a phenomenon known as “peer pressure spending.” (Source: Credit Karma)

Specific to the media reports about the crashing housing market, most people fail to comprehend that they are posting reports about “median home price sales.” This statistic is the average sale price of a small segment of homes. This is not indicative of the overall housing market, nor is it in the foretelling of home appreciation statistics. My prediction is that despite these misleading headlines, home appreciation will still rise in 2023. In conclusion, as my son recently pointed out to me, likely, 50% of all statistics are not accurate.

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at Shmuel@approvedfunding.com.

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