An ugly first quarter for the stock market has many investors in search of a silver lining.

Here’s one: The value of your house has never been higher!

The latest numbers in the Case-Shiller U.S. Home Price Index suggest the average American home increased nearly 20% in the last 12 months. All 20 metropolitan areas saw annual gains of at least 11% with the biggest jumps occurring in Phoenix (33%), Tampa, Fla., (31%) and Miami (28%).

A lack of supply, low interest rates and a booming stock market (until recently) have all contributed to accelerating home prices in recent years.

Thanks to the recent surge in commodity prices, the cost to build a new home has increased even more (over 25% in the last year). In early 2021, it cost $408,000 (national average) to build a new single-family home. This year, it’s $511,000.

The average American family’s largest asset is the primary residence they live in, so the trend of sharply higher home prices is worth celebrating, right? Yes and no. Much depends on whether you’re buying, selling, upgrading or downsizing.

Affordability is already a problem. As home prices have risen, so too have interest rates. Less than 18 months ago, the 30-year fixed mortgage rate hit an all-time low of 2.65%. The same 30-year fixed product today carries a rate north of 5%.

The average monthly mortgage payment on a just-purchased home rose to a record high of $2,123 last month, according to Seattle real estate company Redfin. That’s $530 per month more than it was before the pandemic. And those are the buyers fortunate enough to have their offers accepted. In the four weeks from mid-February to mid-March, 48% of homes sold above their listing price.

Some of you will read these statistics without being the least bit surprised. Rapidly rising property values make sense when inflation has climbed to 40-year highs. But acknowledging the reality of a scalding-hot housing market is one thing. Being mindful of its adverse consequences is another.

Wages are rising, but not nearly as fast as residential real estate. Many young couples and house-hunting families have been priced out of the market. They will end up renting for longer, forfeit years of building home equity and miss out on the expected appreciation of the properties they could not afford.

Even if you love your home, paid off your mortgage and have no intention of moving, you have a vested interest in the financial health of millennials and the middle class. Nearly 70% of the country’s GDP comes from consumer spending. Expensive homes and higher financing costs lead to lower discretionary income and a weaker overall economy.

As property values increase, so do property taxes. The millions of elderly couples living off Social Security checks don’t benefit from a $100,000 bump in their home value unless they sell or refinance, the latter of which is much less attractive now that interest rates have spiked.

You know what does affect them? Paying an extra $2,500 per year out-of-pocket for property taxes.

Fast-rising home prices certainly beat the alternative. Subprime mortgage crisis, anyone? But as is the case in any sector of the economy, strength without balance can lead to instability. Wild price swings, supply-demand imbalances and a widening disparity between haves and have-nots are not a recipe for long-term economic health.

Just something to keep in mind when toasting the record-high value of the place you call home.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.