With Terry Story, 29-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
Severely Lacking Inventory Levels
Steve commences Real Estate Round-Up by asking Terry Story if there’s still low housing inventory, lots of buyers, and very few sellers. “Unfortunately, yes”, says Terry, and references the National Association of Realtor’s Quarterly Metro Home Price Report, released 11/2/2017, which says “Severely lacking inventory levels across the country pinched sales growth and kept home prices rising at a steady clip in nearly all metro areas in the third quarter”, with the median home price at $254,000, up 5.3% over the third quarter of 2016.
Terry’s reality check to Steve’s query on why people aren’t selling is that there is a lack of replacement home purchase options. As the wife of one homeowner put it, “But, honey, where are we going to go?”, putting the brakes on their decision to list the house. Terry sees a big “pent-up supply” of sellers wanting to sell because their home values are no longer underwater, but lacking serious relocation home purchase options.
Retirees Competing With First Time Buyers
Steve presents a hypothetical example of a Florida home that is now worth $500,000—well above its purchase price—and qualifies for a transferable homestead exemption should the owner choose to relocate or downsize. Terry takes up his example and says such homeowners are likely empty-nesters who want to downsize but end up competing with first-time home buyers, who are also looking for homes in the $250,000 – $300,000 range, same as some retirees not looking to move to an adult community. So, homes in that price range are extremely scarce.
Steve also wonders if there’s a slight change in America’s mobility culture, with families now less willing to relocate for job opportunities than before. Terry, from her South Florida perch, sees it differently, where people from more expensive metros are attracted to Florida’s relatively lower home values and view coming to Florida as a bargain. But Steve thinks the price differential between Florida and other parts of the country has narrowed, so moving to Florida for lower home prices may not be as much of a factor.
Terry agrees and adds that the state of the economy plays a big role in relocation decisions. When the economy is healthy, people see few reasons to move.
So, the conundrum continues, with sellers keen to sell in this rising market and buyers unsure if they should wait for prices to fall and risk getting priced out even more by the double-whammy of rising property prices and rising mortgage rates.
Best Time To Buy A Home
Finally, Steve wants Terry’s point of view as an agent on the best time for someone to buy a home. Unsurprisingly, Terry says “Absolutely right now, no question about it!” And on Steve’s follow-up on the best time for somebody to sell, her response is a solid “Oh, absolutely, no question, right now!” Steve jokingly remarks that that’s been Terry’s stance from the first time they did Real Estate Round-Up together and hasn’t changed one inch!
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Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent, Terry Story. Terry is a 29-year veteran with Coldwell Banker located in Boca Raton, Florida.
Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: You’ve been complaining now for five years about low inventory, lots of buyers, no sellers. Is that still the case?
Terry Story: Yes, unfortunately. The National Association released our quarterly metro home price report last week, and the report revealed that they’re—here’s an interesting word—severely lacking inventory across the country, which is draining sales growth and keeping home prices rising at a steady clip in nearly all the metro areas. Home prices basically rose 5.3% over the last quarter all across, all the metro areas.
Steve Pomeranz: Why do you think people aren’t selling? What are the reasons you see in your practice or the explanations?
Terry Story: Reality?
Steve Pomeranz: Yeah, reality.
Terry Story: Here’s reality. Okay, so, last weekend, I go on a listing appointment. They’re very much interested in possibly selling the house. Husband is like, “Okay, let’s sign the paperwork. Let’s do it right now.” He wants out of his neighborhood the worst way. What does the wife say? “But, honey, where are we going to go?”
Steve Pomeranz: Good question.
Terry Story: That put the brakes on everything.
Steve Pomeranz: Where are they going to go? Isn’t that the problem?
Terry Story: That’s the problem. I cannot tell you how many appointments I’ve been on where the sellers just don’t know where they want to go. What’s happened, Steve, is these are what I call pent-up supply of sellers. They may have wanted to maybe sell five years ago, maybe even longer, and because their home values were so low and, in some cases, they were underwater, they couldn’t even consider leaving.
Steve Pomeranz: Okay, but now …
Terry Story: Now-
Steve Pomeranz: … They can.
Terry Story: Now, they can, but, on the flip side, now what’s happened, so now they can afford to sell because they’ve got equity in their home and move someplace else, they’re not finding what they like.
Steve Pomeranz: That’s what I want to ask you about. Hold on to that point for a second. I’ve got a house. I want to sell it. I’ve got nice appreciation. In Florida, we can move over our homestead exemption to our next place …
Terry Story: Lots of incentives. Yeah.
Steve Pomeranz: So there’s not a bad tax deal right there, and let’s say I even want to downsize a little bit. The point is, if I’ve got a $500,000 house, where am I going that’s going to be suitable for me to do this downsizing?
Terry Story: That’s the problem, and it depends at what age point you’re at. I’m assuming, if you’re downsizing, for a large majority of people, it’s because they’re empty-nesters now. They don’t need the house of that size. They’re maybe retired or close to retiring, so they want something smaller, less maintenance. When you look at the options, now, what’s happening is the downsizers, the empty-nesters, the retirees are competing with the first-time home buyers, so you’ve got the clash of the two parties.
Steve Pomeranz: Prices seem to be too high for these smaller units in a sense.
Terry Story: Yeah, so you’ve got the retirees trying to buy. Let’s use the number that you said, $500,000. First-time home buyers, they’re looking maybe 250-300,000, and so are the retirees looking for that same price point and especially if they’re not looking for an adult community. Obviously, somebody, a first-time home buyer under the age of 55 is not competing in the adult community, and if a retired person is looking not to move into a retirement community, now, they’re competing with that first-time home buyer, so that market is extremely scarce.
Steve Pomeranz: It used to seem that people were more willing to be mobile, that if they were jobs in a certain state, you’d pick up your family and you go to where the jobs are, and America seemed to be a very mobile country, but, now, I’m not so sure that’s the case. I know neither of us are economists and have really studied this thing, but how many people are willing to move out of the area to an area where the cost of living is less and the cost of housing is less? That doesn’t seem maybe to factor in too much here.
Terry Story: Of course, being in South Florida, we see it the opposite way. Maybe in the northeast or other parts of more expensive communities or areas, they’re coming to Florida because they think it’s less expensive. We think it’s expensive here, but if you’re coming from the New York area, for example, coming to south, coming to Florida would be a bargain.
Steve Pomeranz: Yeah, but I think that differential has narrowed. I mean, I remember, in the ’80s, you could have a two-bedroom, three-bedroom house on Long Island and you could buy a McMansion for 40% of what you’ve got, of the proceeds. But I think prices have risen here enough that maybe the differential is not so much. What do you think?
Terry Story: Yeah, it could be. I mean, in my marketplace and what I see mostly, we see snowbirds in the wintertime purchasing second homes, and we see people either trying to move up or move down that are local.
You also got to take into consideration, like you said, the economy. If the economy is stable here, there’s no need to move, unless you’re moving to be closer to family or someplace else.
Steve Pomeranz: Right.
Terry Story: The economy is strong all over the country, so I don’t think it’s necessary to move to a different place for economic growth, depending on what industry you’re in.
Steve Pomeranz: It’s a conundrum. I know you’ve been complaining about it for a long time. It looks like it’s going to continue for a while. So, if you’re a seller, a rising market is your friend, right? I would much rather sell into a rising market.
Terry Story: Absolutely.
Steve Pomeranz: If you’re a buyer, you could buy, but if prices are rising, then you’re going to take the risk of the cost of waiting. By the time you delay, it may cost even more when you pull the trigger.
Terry Story: That’s right.
Steve Pomeranz: Yeah, so that’s an issue, but, Terry, I always want to ask you this one question when we have this discussion. From your point of view as an agent, when is the best time for someone to buy?
Terry Story: Absolutely, right now, no question about it.
Steve Pomeranz: When is the best time for somebody to sell?
Terry Story: Oh, absolutely, no question, right now.
Steve Pomeranz: I can tell you, we’ve been doing this for a long time, and you haven’t changed one iteration, one inch.
Terry Story: People need roofs over their heads all the time in all economy levels so.
Steve Pomeranz: Yeah. You really do perform a great service because you’re giving people a home to raise their families. I mean what could be more wonderful than that?
Terry Story: Very rewarding.
Steve Pomeranz: Very rewarding. Terry Story, as always, my favorite guest, a 29-year veteran with Coldwell Banker located in Boca Raton, Florida, and you can find her at terrystory.com.
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Thanks so much, Terry.
Terry Story: Thanks for having me, Steve.