A few weeks ago, we saw the worst of the media’s knee-jerk habits on display when the Dow Jones industrial average, a widely used stock index, hit what was widely reported as a “record high.” Does that mean that golden economic times are ahead?

Well, no. Or maybe they are (and, yes, it actually might be a good time to buy a home, as we’ll discuss in a bit), but if so, we sure can’t tell from the Dow.

Here’s the thing: The Dow is a bad, very bad, no good indicator of economic health. Planet Money explains (to the credit of “the media,” a bunch of other outlets also eagerly jumped on this counter-narrative as well):

After adjusting for inflation, the Dow was higher in 2000 than it is today. It was also higher in 2007. It would need to rise another 10 percent or so to hit an all time high in real (i.e., inflation-adjusted) terms.

When reporting on other numbers that change over time, it’s routine to adjust for inflation. So when people talk about wages stagnating for American households, it means that, after you adjust for inflation, the median wage is roughly the same as it was 15 years ago. If you didn’t adjust for inflation, you would say the median wage has risen by more than 40 percent over the past 15 years. But that would be a meaningless statement.

Moreover, the Dow isn’t really a good measure of corporate performance anyway (the S&P 500, among others, is better):

The Dow average, drawn out to two decimal places, may seem like some perfectly scientific number, but it’s far from it. A small committee selects 30 big companies — I.B.M., G.E., McDonald’s, Disney and so forth — and then adds up the price of their stocks. Then the analysts divide it by the Dow Divisor, a misleadingly precise-seeming number formulated to account for things like dividends and splits that right now is, well, about 0.132129493. The resulting figure is repeated throughout the country.

Great Rates on Home Loans Are Here.

And those are the least of the Dow’s problems. More troubling is that it ignores the overall size of companies and pays attention to only their share prices. This causes all sorts of oddities. ExxonMobil, for example, divides its value into nearly five billion lower-cost shares, while Caterpillar has around 650 million more expensive ones. Therefore ExxonMobil, one of the largest companies in history, pulls less weight on the Dow than a company less than a fifth its size.

In summary:

1. If you adjust for inflation (and, seriously, why don’t reporters take the time to do this), the Dow is still roughly 10 percent below the record high set in 2000. The Dow was also higher in 2007.

2. Even if it was at a record high, mathematically, the Dow is an aribitrary, obviously flawed measure of the health of American corporations (flaws admitted to in the Planet Money podcast by the Dow itself)

3. The performance of the stock market, while important and not at all irrelevant to the broader economy, tends to ebb and flow much faster than indicators such as employment and middle class earnings.

4. Many folks considering buying homes, especially first-time home-buyers, aren’t heavily invested in the stock market, if at all.

5. Massive economic thunderclouds, like the debt and over-regulation, are still looming.

But while it’s not a good idea to buy into the Dow hype, that doesn’t mean that better times aren’t ahead. And even if they’re not, it’s still a relatively optimal time for families who are in good financial position to buy a new home to go ahead and do so. This is also true for families who already own their homes to, say, go ahead and take out a home refinance loan.

Simply put, Texas home interest rates are still very, very low in historical terms (click here for current rate conditions), which means that it’s become much cheaper to borrow over the past few years than in previous eras. And at TexasLending.com, we work hard to make sure our Texas home loans stay as affordable as possible.

About Kevin Miller

Kevin Miller, Owner & CEO of TexasLending.com. TexasLending.com provides expert service in the field of residential mortgages.

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A week ago, the S&P/Case Shiller composite index, a leading seasonally-adjusted survey of the U.S. housing market, released some pretty promising figures showing that prices of single-family homes in the United States finished 2012 with a bang — posting their highest yearly gain since July 2006. The survey, which looked at prices in 20 metropolitan areas, rose 0.9 percent in December and leaped a healthy 6.8 percent year-over-year compared to 2011.

According to The Daily Ticker, confidence is spreading somewhat, leading to additional increases in home prices:

Douglas Yearley, CEO of luxury homebuilder Toll Brothers, says in an interview with The Daily Ticker that the recovery “feels like it’s the real deal this time.”

“We feel really good in almost every market we have in the country,” Yearley notes. “We’re seeing great traffic and sales.” Yearley points out that orders for new homes are up 50% year-over-year and 40% for the first three weeks of February. The Horsham, Pa.-based company has been raising home prices in the majority of its 50 markets, a move that has encouraged undecided homebuyers to take the plunge.

This, of course, is positive news. But unfortunately, there are several major issues still facing American homeowners — namely economic risks posed by the debt and cumbersome government regulations that will make buying and owning a home more costly. Plus, the short-term economic effects of the sequester remain to be seen.

Moreover, in regions prone to over-heating like California, the housing market gains have been so rapid that the dreaded “bubble” word is already starting to be whispered among many experts. Nouriel Roubini, an economist nicknamed “Dr. Doom” who famously predicted the 2008 financial meltdown, said recently that his outlook is “short-term bullish, long-term catastrophic” and that moves by the Federal Reserve are contributing to the beginning of the “the mother of all asset bubbles.” Yikes.

Fortunately, compared to those areas of the country, Texas weathered the 2007-2008 housing collapse relatively well, and there aren’t as many signs of a looming bubble here in the Lone Star State this time around.

But if home prices do indeed post sustainable gains, families in good position to buy a home might want to consider doing so while prices are still relatively low. At TexasLending.com, we’re ready and waiting for you with a diverse, affordable range of Austin home loans, Houston home loans and Dallas home loans.

About Kevin Miller

Kevin Miller, Owner & CEO of TexasLending.com. TexasLending.com provides expert service in the field of residential mortgages.

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We spend no small amount of time looking at the housing market here at Texas Lending Today. Historically, with rock-bottom home interest rates in Texas and with home prices only just beginning to recover, its a pretty favorable time to buy a new home. But have you ever wondered how the U.S. housing market (and especially the Texas housing market) sits globally?

Recently, The Economist put together a nifty interactive infographic that shows how relatively affordable housing is in America and, when considering that Texas is among the most affordable states in the U.S. for home-ownership, the Lone Star State as well. The tool allows you to nominal and real house prices, housing trends over the past several decades, and how renting compares to owning in each country.

You can check out the tool here. Play around with it for just a few minutes, and you’ll get a pretty good idea how relatively affordable housing is here in the United States.

For example, in many European markets, prices are falling but still high — indicating that while their economies are still suffering from a massive collapse in home prices (led by a striking 9.3 percent decline in Spain over the past year), housing is still pretty expensive over all. In other words, there’s not much of a silver lining from a cost-of-living perspective.

Compare that to America, where prices have generally been rising over the past year but are still relatively affordable. In other words, the United States is benefitting from both sides, an economy with potential to recover and relatively low living costs. The only countries listed where housing is consistently more affordable than in the United States are Switzerland, Japan, and Germany.

According to The Economist:

America’s housing-market revival looks sustainable in part because the sharp correction in house prices over the past few years has made homes cheap by historical standards. A year ago house prices were still falling, by 3.6%. There has been a turnaround since: the latest data show prices rising by 4.3%. But based on the ratio of prices to rents, houses are still 7% undervalued; judged by the price-to-income ratio, they are 20% below fair value. It also helps that mortgage rates are at historic lows and are likely to stay that way, since the Federal Reserve has promised to keep an extremely loose monetary stance for the next couple of years.

In other words, we’re seeing some positive signs for the housing market. That’s great news, but it also means houses are likely going to get a little bit more expensive as time goes on.

Moreover, there remain dark clouds on the horizon of the U.S. economy. Government spending is still out of control, and there seems like little appetite in Washington to do much about it.  This environment has fueled low rates but low rates will not last forever.

With annual home sales on average roughly 75 percent below where they were eight years ago there is great potential for housing to continue to recover. So for now, it’s a good time to buy a home. If the time is right for your family, give us a call. We have an unmatched range of Dallas home loans, Austin home loans and Houston home loans ready to make your home-ownership dreams come true.

About Kevin Miller

Kevin Miller, Owner & CEO of TexasLending.com. TexasLending.com provides expert service in the field of residential mortgages.

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If 2012 was a year of recovery in cities across Texas, 2013 appears primed to be a year of resurgence. That, at least, was the attitude among home builders attending a recent housing industry convention in Austin.

According to Austin’s KVUE:

There’s good news for builders and others involved in the Central Texas housing industry. The forecast for this year is looking promising. In fact, Austin is leading the nation when it comes to growth. For the hundreds of realtors and builders gathered at the Renaissance hotel Tuesday morning, 2013 looks to be a very profitable year.

“Their businesses were better in 2012 and likely will be better in 2013,” said Eldon Rude, the director of Metrostudy, which examines the supply and demand for housing in Central Texas. Rude says this year, the housing market is expected to remain strong, and home prices are on the rise. “My forecast is that we probably have between 9,500 and 10,000 new single-family housing starts in Austin in 2013, so certainly another increase from a year ago,” he said.

We’ve seen a bevy of these types of reports in recent months. A big reason for this, of course, has been the persistently strong job market here in Texas.  Good jobs allow people to buy (or build) good houses. And Texas cities — especially Austin, Houston and Dallas — have some of the best.

According to statistics released this week by the Texas Workforce Commission, the statewide unemployment rate fell to 6.1 percent in December, down slightly from November and considerably from December 2011′s 7.4 percent. It was the fourth consecutive month with a decline, and more than 260,000 new jobs were added throughout the year. Six out of the state’s 11 major industries added jobs, while the largest number of losses came from government sectors. The private sector here is booming. Moreover, the unemployment rate here in Texas is one of the lowest in America; the nationwide average is 7.8 percent.

In other words, it’s simply a great time to buy a home here in Texas — especially since, here at TexasLending.com, our Texas home interest rates are so incredibly low. Contact us today to learn more about a Dallas home loan, Austin home loan or Houston home loan.

About Kevin Miller

Kevin Miller, Owner & CEO of TexasLending.com. TexasLending.com provides expert service in the field of residential mortgages.

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In the very remote chance that you needed additional proof that Texas is simply an extraordinary place to live — at least, that is, if you like high incomes, low unemployment and a robust economy as steadfast as the Lone Star State is wide.

According to Slate:

Texas’ rapid economic growth has been largely a question of rapid population growth—it’s warm, it’s close to Mexico, and it has a very permissive building-permit regime, so lots of people have been moving there—but the Bureau of Economic Analysis’ new data release on personal income growth in 2011 shows a great year for Texas across the board.

Personal income grew in every metropolitan statistical area in America, but Texas was a star performer. Its biggest MSA, the Dallas-Fort Worth area, was in the top quintile of all American metro areas. So was Houston. So was San Antonio. So was Austin. So was El Paso. That’s five out of the state’s top five metro areas, and you can throw in Corpus Christie and some of the small West Texas cities for good measure.

It’s a pretty astounding performance — especially since it hasn’t been isolated to one or two particular cities. Texas cities of all shapes and sizes, from Dallas, Houston and Austin to El Paso, Midland/Odessa and Abilene, did well.

Note that a significant driver of Texas’ growth has been the state’s persistent population boom. A stable or growing population is good for employers, as it tends to mean there’s a larger talent pool from which to hire. It’s also good for businesses, since more residents means more customers. And, of course, it’s very, very good for the housing market and construction industry. Housing is especially key since most Americans have the bulk of their assets tied up in their homes. Note also that Texas has a permissive building-permit regime, making it easier here than in many states to be a homeowner.

Moreover, as the numbers show, the population boom has been quite healthy. If the flood of migration swamped the labor pool, you’d see incomes drop somewhat. Moreover, if the economy couldn’t handle the boom, people would leave or stop coming. That’s what has happened in parts of the Midwest, where the economic downturn and the subsequent population drain have been mutually destructive, creating a sort of downward spiral that is difficult to escape.

In short, Texas is a great place to call home — especially if you’d like to be a homeowner. And here at TexasLending.com, we’d love to welcome you (just in time for the holidays) with the most lowest interest rates you’ll find anywhere in the state. Whether you’re looking for an Austin home equity loan, a Houston home purchase loan or a Dallas home refinance loan, we’ve got what you need.

About Kevin Miller

Kevin Miller, Owner & CEO of TexasLending.com. TexasLending.com provides expert service in the field of residential mortgages.

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