With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL
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In this week’s Real Estate Roundup, Steve spoke with Terry Story, 31-year veteran with Keller Williams, about the excellent state of the country’s economy, with housing inventory and employment levels on the rise. Steve and Terry also looked at some predictions that realtors made ten years ago.
Things Are Looking Up In Real Estate
There are a lot of positive changes happening. The real estate industry is hot. New home sales jumped 17% in December. Construction of new homes has increased significantly. In fact, Terry says, “if you look at new construction by region, the Northeast is up 25%. In the Midwest, construction is up 37%. And the West is up about 20%.”
The South is a bit of a different story. It’s only up 9%. Why? Steve suggested that perhaps the South already has enough new construction or that there’s just not enough land left to build on.
But the good news continues. The economy is thriving. The employment level is rising. The stock markets are at record highs. And, while home prices have risen, they’re only about 3% to 5% higher. And the employment and investment numbers mean that more people have more money, money they can spend on a new home.
Past Prediction One: Streamlining Home Sales
In 2010, a group of respected realtors was asked to offer predictions about things that might happen over the next ten years. This was a project called 2020 Re-envision. The realtors’ first prediction was that real estate agent commissions would go to a flat fee. Basically, the realtors were talking about companies popping up that wanted to control every aspect of selling a house. They would then simply employ agents to open doors, and agents would then receive a flat fee.
This prediction only came true for a few companies in a very small market. Terry never really bought into this idea of cutting out the real estate agent. She explained, “People like working with other people. And the truth of the matter is that selling real estate and buying real estate, it’s a very emotional experience.”
Prediction Two: Technological Changes
The second prediction the realtors made in 2010 was that technological advances would be used by realtors. This prediction has indeed come true.
Terry and her colleagues use 3-D imaging when showing homes, even doing a 3-D tour of a home. In addition, they also use a type of augmented reality or “virtual staging”. She reported, “We can take a home that’s empty and, with a computer, place furniture in it. A lot of people can’t visualize what a home could look like otherwise.”
Past Prediction Three: Less Office Work, More Service
The realtors also predicted that there would be a decline of commercial offices in favor of co-working and flexible office space. In terms of commercial sales, Terry isn’t sure if this prediction came to fruition. But she did note that for residential sales, a lot of realty companies’ brick and mortar stores are closing or consolidating. “If you really think about it, most realtors aren’t working out of an office. They’re out in the field, showing homes, talking with builders, etc. So, real estate agencies don’t need huge office buildings anyway.”
If you’d like to learn more about buying or selling a home, check out Keller Williams.
Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.
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 31-year veteran with Keller Williams, located in Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: I’ll tell you, it seems to me from the data we’re getting here about real estate that things are really hot.
Terry Story: Hot, hot, hot. Yes, they are. The new home sales jumped almost 17% in December.
Steve Pomeranz: New home sales.
Terry Story: Yes. Well, not new home sales.
Steve Pomeranz: Housing starts.
Terry Story: Not home starts, which is construction.
Steve Pomeranz: That’s good.
Terry Story: Housing construction.
Steve Pomeranz: Yeah.
Terry Story: So that’s awesome news, and we’ve talked about it for a long time.
Steve Pomeranz: I know. Those developers don’t know what they’re doing because they didn’t listen to us.
Terry Story: I know. I don’t know why they didn’t listen.
Steve Pomeranz: More housing, more housing.
Terry Story: We need more inventory.
Steve Pomeranz: That’s right, exactly.
Terry Story: We should do a protest.
Steve Pomeranz: But 17%, that is huge.
Terry Story: That is big numbers.
Steve Pomeranz: I know.
Terry Story: That’s exciting stuff, and if you look at it by region, Steve, the Northeast is up 25%.
Steve Pomeranz: Okay, wow.
Terry Story: With new construction, 37% in the Midwest, about 20% in the West and then I don’t know what goes on in the South. They’re only at 9%. What do you think?
Steve Pomeranz: Yeah, I don’t know. Maybe we have enough construction. Maybe we’re running out of land or something.
Terry Story: Yeah, we have just swampland left in the South.
Steve Pomeranz: Yeah, I know. Those darn ecologists.
Terry Story: But you’re thinking everybody wants to come to the South, why aren’t we building more houses in the South?
Steve Pomeranz: I know. I don’t know. Maybe they want to keep prices high. Maybe it’s a big conspiracy. All right, well, very good. So things are really hot. I mean, the economy is doing well. I think the economy added two million jobs last year.
Terry Story: Wow.
Steve Pomeranz: I just read. So there’s a lot of people with money in their pockets and forever mobile, wanting to move up in the world, having children, downsizing, silver tsunami folks, who will be moving out of their homes at some point in time. So there’s a lot of activity on the rise. Money is cheap.
Terry Story: Money is cheap, yes, it is.
Steve Pomeranz: And plentiful.
Terry Story: Readily available.
Steve Pomeranz: I know, so this is a good time in the economy.
Terry Story: Absolutely.
Steve Pomeranz: Stock market’s at record highs.
Terry Story: It’s great.
Steve Pomeranz: Okay, and home prices are, they’ve risen.
Terry Story: They’re rising.
Steve Pomeranz: But not ridiculously, right?
Terry Story: No, no.
Steve Pomeranz: In like a 3 to 5% range.
Terry Story: Correct.
Steve Pomeranz: Okay.
Terry Story: Yep.
Steve Pomeranz: Okay, so let’s have some fun here. Let’s take a look at some predictions that were made 10 years ago by notable realtors. Then let’s take a gander at the predictions for 10 years from now, to see what the real estate market may have in its pocket.
Terry Story: Sounds good.
Steve Pomeranz: Looking back to 2010, and I’m going to ask, I’m going to tell you about these.
Terry Story: Sure.
Steve Pomeranz: And you’re going to tell me whether you think they were true or not. There was a project called 2020 Re-envision, where they asked all of these realtors what they thought was going to happen in the next 10 years, and this was in 2010. Number one was that commissions would go to a flat fee. Now describe a flat fee versus the way a traditional fee works.
Terry Story: Yeah, so basically what they were looking to do is, there are companies out there that wanted to control everything, control the closing, control all the steps, and basically, they would be paying people, agents, to just open doors. So it’d be more of a flat fee type situation or like a la carte, so whereby you would say, “Well, I want you to do this for me, and so therefore it would be this amount.”
Steve Pomeranz: I want you to list my house on MLS.
Terry Story: I want you to list it in the MLS.
Steve Pomeranz: That’s all I want you to do.
Terry Story: MLS only, nothing else. Correct.
Steve Pomeranz: Okay.
Terry Story: Now there is some of that activity, but it’s such a small, small market.
Steve Pomeranz: So, in essence, it’s trying to streamline the sales process to reduce costs.
Terry Story: AKA, remove the realtor.
Steve Pomeranz: Remove the realtor. So, the question is they’re going-
Terry Story: That won’t happen.
Steve Pomeranz: Right. They’re going to be substituting something for the role of the realtor.
Terry Story: Right.
Steve Pomeranz: Opening doors.
Terry Story: Opening doors.
Steve Pomeranz: Because that’s all you guys do.
Terry Story: Really, there’s companies out there that claim that they can put a device on the door and you can have a total stranger open up the door and go take a look at it for themselves. So you as an owner don’t even have to show it.
Steve Pomeranz: Okay. Well, let’s move on. Now there’s the actual bringing the buyer and seller together.
Terry Story: Correct.
Steve Pomeranz: I mean, that’s really where the rubber meets the road with a realtor.
Terry Story: That’s right.
Steve Pomeranz: Realtor has a lot of experience, knows the language, and knows and can see right away where the weaknesses are, where the strengths are, and help you to negotiate those.
Terry Story: And the truth of the matter is, is selling real estate and buying real estate, it’s a very emotional experience.
Steve Pomeranz: Yeah.
Terry Story: We wouldn’t have an industry if it wasn’t. You need a middleman to bridge the two together.
Steve Pomeranz: I think people like dealing with people. They don’t really want to deal with a robot or some kind of a device, right?
Terry Story: Not with this. It’s too personal, and it’s too expensive.
Steve Pomeranz: Not certain generations.
Terry Story: Right.
Steve Pomeranz: Maybe younger generations will, at some point. All right. Number two, they expected technology changes, so 3-D and virtual and augmented reality. Which when I read this, I thought, well, that didn’t happen. But you told me otherwise.
Terry Story: Yeah, absolutely. We do have 3-D imaging on when you’re looking at homes, you can do a 3-D tour of a house.
Steve Pomeranz: Yeah.
Terry Story: Actually, it makes me sick when I watch them, physically sick.
Steve Pomeranz: But you go on a boat all the time, don’t you?
Terry Story: I can boat, but I just can’t watch that 3-D.
Steve Pomeranz: Wow.
Terry Story: It moves around too much.
Steve Pomeranz: Okay.
Terry Story: Then the augmented reality, that’s what we call virtual staging. We can take a home that’s empty and place furniture in it. Because you know, Steve, a lot of people can’t visualize what it’s supposed to look like.
Steve Pomeranz: I’m raising my hand on that one. You know when you buy a carpet, and they give you a swatch, and you’re supposed to hold it up into the corner?
Terry Story: Yep.
Steve Pomeranz: I don’t see anything. I can’t see anything.
Terry Story: So that virtual staging is really important because when you go into a bedroom and it’s empty, you can’t visualize that the bed, the armoire, the nightstands are all going to fit in there. It looks so much smaller than when it’s actually furnished.
Steve Pomeranz: So that’s placed in digitally?
Terry Story: It’s placed in digitally so you can visualize it.
Steve Pomeranz: That’s very cool.
Terry Story: Yep.
Steve Pomeranz: Yeah, also these pictures that the agents post, which make a 10 by 12 room look like a palace.
Terry Story: Right. Wide-angle lenses.
Steve Pomeranz: All right. Number three, less offices, more service. This is from the point of view of the realtor. They predicted there would be a decline of commercial offices in favor of co-working and flexible office space. Is that happening in your industry?
Terry Story: Well, on the commercial side of things, I can’t really speak of that. But on the residential, we do see a lot of, number of brick and mortar closing or consolidating.
Steve Pomeranz: Yeah.
Terry Story: When you think about it, in a real estate office, there aren’t that many people that actually go to the office.
Steve Pomeranz: Right.
Terry Story: It’s actually, if you bring it down even further there’s only about 10% of the agents work. So if you have 250 agents, you don’t need an office to hold 250 agents. You need an office that can hold-
Steve Pomeranz: Well, they have a support staff.
Terry Story: Correct.
Steve Pomeranz: Now, that’s generally the area of the office that we’re not allowed to see because there’s always the front office.
Terry Story: Right.
Steve Pomeranz: Where they take me into the long table.
Terry Story: And then the bullpen.
Steve Pomeranz: Then maybe there’s a bullpen. But other than that, I don’t know what’s going on behind there. It could be all empty space for all I know. All right. Finally, no more agents. I guess we did that one. Let’s skip that one. New tech, bringing new markets, using Skype and FaceTime and the like.
Terry Story: Yeah, absolutely. I’ve actually sold a couple of houses this past year and years prior too just by doing FaceTime, whereby the client is called and say, “Hey, I’m really interested in this house. Can you show it to me?” And he’s not in the area, or he or she’s not in the area. So I’ll go over there, get on FaceTime, and walk them through the whole house.
Steve Pomeranz: They can see the whole house.
Terry Story: They can see the whole thing.
Steve Pomeranz: On the phone.
Terry Story: I’ll walk them through it on the phone.
Steve Pomeranz: Yeah.
Terry Story: Especially in a market like this, Steve, where there’s low levels of inventory and the client is familiar with our area.
Steve Pomeranz: Yes.
Terry Story: They’re not doing it totally random. Let’s say they’re buying a condo. They’re familiar with a building, a unit becomes available, that’s a quick and easy way for them to see it and be able to put a bid on it.
Steve Pomeranz: Houses have a bit of a ubiquitous-ness to them. In other words, there’s similar features, mostly.
Terry Story: Right.
Steve Pomeranz: With just some custom changes and the like. So they can see the differentials, right, because they know that the bones are going to be basically the same.
Terry Story: Right.
Steve Pomeranz: Something like that.
Terry Story: Yep.
Steve Pomeranz: All right. Well, we are out of time. As always, Terry Story, a 31-year veteran with Keller Williams, located in Boca Raton, Florida, and she can be found at terrystory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.
