With Terry Story, a 30-year veteran with Keller Williams located in Boca Raton, FL
Podcast: Play in new window | Download
Steve caught up with Terry Story, a 30-year veteran real-estate agent with Keller Williams Realty in Boca Raton, Florida to get the lowdown on the current housing market, interest rates, and some creative things home buyers are doing. Terry shared her take on the “heat” of the current housing market, why it’s a great time to buy and, therefore, also a great time for sellers to capitalize on the “buyers’ market”.
A Buyer’s Market
Home prices are rising at a far slower rate in the current housing market. This is good news for buyers. For sellers, it poses a bit of a problem. Interest rates have also started coming down. Throughout the first few months of the year, interest rates were staying steady or climbing, however, they’re beginning to drop. Better interest rates mean more people are eligible and able to buy homes. This stokes the buying pace, which, in turn, can drive home prices higher. So that’s a boon for sellers.
Another benefit for buyers is the fact that home prices are increasing at the same rate as that of income. Individuals are earning more and are, therefore, more capable of affording the home they’re looking for, getting their dream home.
What it boils down to is this: buyers have more power.
Taking Control As A Buyer
There are a number of things home buyers can do to put themselves in a better position when purchasing a home. First of all, of course, check your credit score and debt to income ratio well in advance of looking to buy. Those two things are major determinants as far as what kind of interest rate you can get. Doing whatever you can to improve them before shopping for a mortgage loan will definitely help you out.
One thing many people don’t know is that if you can put 20% down, you can avoid having to pay private mortgage insurance – PMI – and that can substantially lower your monthly payment.
Time Is On The Buyer’s Side
Another benefit for current home buyers is that they now have more time to plan, find their dream home, and make sure it’s exactly what they’re looking for.
At the end of last year and the beginning of this year, home prices were steeper and there was a massive flood of homes on the market with a limited number of buyers who could afford the cost. That meant a substantial number of buyers fighting for a limited number of affordable homes. This situation can force buyers’ hands, making it necessary for them to make fast decisions in order to get a home before someone else snatches it up. Buyers were more likely then to buy homes that didn’t always tick off all their “wish list” boxes. In the current market, individuals have the time to breathe, to review the many affordable homes on the market and be a little choosier when making such an important decision.
Different Ways Home Buyers Are Using Their Homes
In recent years, people have become more creative in how they use their home space. For example, dining rooms have been converted into home offices or a kids’ playrooms. Laundry rooms sometimes double as pet washing centers and kitchens have expanded into family rooms.
Another trend in the home market is the conversion of warehouse spaces or lofts into dwelling apartments, especially appealing to those looking to cut down their driving commute, as well as being close to restaurants, shops, and cultural events.
One Final Note About Interest Rates
One final piece of the housing market puzzle to note is the fact that interest rates are sitting somewhere around 3.75%. After the fourth quarter of last year, interest rates dropped to 5% and then dropped even lower. Buyers are paying roughly $150 less per month, on average, than they were just six months ago. This means that over the course of a 30-year mortgage, buyers can get by with spending significantly less to purchase the home they really want.
To learn more from Terry on the current housing market and buying or selling a home, visit her at https://www.terrystory.com/.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. 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 United Capital.
Steve Pomeranz: It’s time for Real Estate Round-up. This is the time every single week we get together with noted real estate agent Terry Story. Terry’s a 30-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: Home prices are rising but at a much slower pace.
Terry Story: Yes, this is welcome news-
Steve Pomeranz: [LAUGH]
Terry Story: Depending on what side of the fence you’re on, right?
Steve Pomeranz: That’s true.
Terry Story: Seller, not so good, buyer, yahoo! The annual price increase, just to give you an example, Steve, only went up 1.8% in January in San Francisco compared to 10.2%-
Steve Pomeranz: So that’s a pretty hot market, so, yeah.
Terry Story: Correct, so in the really, really hot markets, you could really see the difference.
Steve Pomeranz: Now this data is lagging somewhat. Now, we’re sitting here in March, almost April.
Terry Story: Right.
Steve Pomeranz: And we had seen much higher interest rates toward the end of last year.
Terry Story: That’s right.
Steve Pomeranz: And into this year as well. But we have seen a fairly significant drop in interest rates, so things, I think, are picking up overall.
Terry Story: So things are definitely stirring up. And what also is nice, Steve, is home prices are now rising roughly at the same rate as incomes.
Steve Pomeranz: Yeah.
Terry Story: So that’s why things had to slow down; the prices of homes were rising greater than people’s income.
Steve Pomeranz: Too fast, yeah.
Terry Story: And that creates, yeah.
Steve Pomeranz: Yeah, it’s a self-correcting mechanism if you think about it. Because if prices keep rising and incomes can’t keep up, then you end up with a bubble, and bad things happen. And then it corrects, but then it hurts people along the way. But if you can get a smooth kind of increase, and now we’re getting some good increases in people’s personal income.
Terry Story: Yeah.
Steve Pomeranz: So housing prices stay affordable for most of us.
Terry Story: And a growth in inventory levels, which balances out the inventory, ‘cause it was very much heavy-handed towards the sellers and now we’re seeing a little bit of a balance in that area.
Steve Pomeranz: Yeah, so buyers have a little more power?
Terry Story: Yes.
Steve Pomeranz: Yes, okay.
Terry Story: And you can see it, Steve, the buyers have more time to make a buying decision.
Steve Pomeranz: Yes.
Terry Story: They go to a house, they don’t necessarily have to jump that moment, they have time to breathe, go look at a couple of others, and then maybe come back and buy that house.
Steve Pomeranz: Yeah, I mean, just a few months ago rates were rising, so we better lock in now.
Terry Story: Yeah, lock in now; jump with both feet.
Steve Pomeranz: Yeah and there’s lots of bidders, so we better bid aggressively to get this house.
Terry Story: Yeah.
Steve Pomeranz: So this is a much better environment to be buying.
Terry Story: It’s a little bit healthier, yes. It’s not as fast, although it is still fast depending on your price point. And yet for sellers, it’s still rising and prices are at their relative highs.
Steve Pomeranz: Right, they’re just not rising at the rate that they were.
Terry Story: Yeah, yeah.
Steve Pomeranz: So Terry, when’s the best time to buy?
Terry Story: Oh, definitely right now [LAUGH].
Steve Pomeranz: And what’s the best time to sell?
Terry Story: Oh, it has to be now-
Steve Pomeranz: [LAUGH]
Terry Story: If it’s a good time to buy, you’ve got to put it on the market to capture those buyers.
Steve Pomeranz: You’re such a [LAUGH].
Terry Story: [LAUGH]
Steve Pomeranz: You’re so predictable.
Terry Story: [LAUGH]
Steve Pomeranz: And, by the way, that is a running joke for how many years now? Ten years?
Terry Story: [LAUGH]
Steve Pomeranz: [LAUGH] Yeah, so I looked this up before we met. And, again, this is just from Google, and I don’t know that deals are done here. But I saw that the 30-year mortgage rate was at three and three-quarters.
Terry Story: Yeah, that, I mean, I haven’t seen that yet on a closing because everything I’m doing went to contract 45 days ago, 60 days ago, closing now. But if that’s indeed the case, that’s just wonderful news. I know for sure in the low, low fours, so it doesn’t surprise me that you saw some things at 3.75. But, Steve, you also know that when you look at interest rates, you’ll hear it quoted at 3.75. But there’s also criteria like you have to have good income.
Steve Pomeranz: Yes.
Terry Story: You have to have a certain amount of down payments.
Steve Pomeranz: Yeah, we were going to talk about that in a minute. I mean, there’s things that are out of your control. Let’s talk about that.
Terry Story: Sure.
Steve Pomeranz: And things that are in your control, and my motto and credo has always been to concentrate on the things in my control. It took me a long time to figure that out-
Terry Story: [LAUGH]
Steve Pomeranz: ‘Cause I was battling windmills for most of my life, [LAUGH] and so I was like, wait a minute, what’s that?
Terry Story: Control what you can. [LAUGH]
Steve Pomeranz: [LAUGH] Let’s think about this a bit. So, as a buyer, there are things that you can control and down payment is one of them.
Terry Story: Sure, if you put 20% down, you avoid PMI insurance, and PMI insurance adds a lot to monthly payment.
Steve Pomeranz: Yeah.
Terry Story: So you really if you can and you can afford it-
Steve Pomeranz: That’s private mortgage insurance.
Terry Story: Right. If you can put the additional downpayment down it’s worth it. And then, of course, your credit rating, the higher your credit rating they’ll give you a favorable interest rate.
Steve Pomeranz: Yeah.
Terry Story: So if your credit rating is not so great, you’re going to pay a higher interest rate.
Steve Pomeranz: And I think we kind of all know that.
Terry Story: Yeah.
Steve Pomeranz: I mean, that’s the biggest benefit of having a good credit score.
Terry Story: And then, of course, what risk there is involved, your debt-to-income. So if you’re at a lower debt-to-income that also affects. So all of these things are things that are in your control and you should capitalize on those items.
Steve Pomeranz: One final point here is that when rates, the fourth quarter last year, they hit about 5% mortgage rates.
Terry Story: Right.
Steve Pomeranz: And if, in fact, they are at three and three-quarters, that’s $150 less per month in your mortgage payment.
Terry Story: And that’s a lot of money when you multiply it out over 30 years.
Steve Pomeranz: Oh- yeah, it’s quite a lot of money. And also if you think about putting 20% down, avoiding PMI costs, that would keep it lower. So if you do the right things, then you can possibly buy the house that you want that’s within your budget.
Terry Story: Yeah, absolutely.
Steve Pomeranz: Cool, well, buying a house is changing or what people are looking for in a house is changing. There used to be this idea that you had a house and you didn’t really design it based upon use, you designed it based upon what should be in the house. So, for example, in my house, we had a living room and it was a sunken living room [LAUGH]. And there was a couch, a couple of chairs and coffee table and nobody ever used it. We just kind of used it to walk through to the other part of the house.
Terry Story: It was always for the company that never came.
Steve Pomeranz: [LAUGH] Exactly right.
Terry Story: With the plastic on it to protect it.
Steve Pomeranz: Yeah, we didn’t go that far.
Terry Story: [LAUGH]
Steve Pomeranz: We were a third, fourth generation.
Terry Story: Oh, okay, we had the plastic in my household.
Steve Pomeranz: [LAUGH] Yeah, why did you have plastic if nobody was sitting on it?
Terry Story: I have no idea.
Steve Pomeranz: That’s a different story. The bottom line is people are using their houses differently, they’re actually using their houses and they’re using them in different ways. For example, I read here that laundry rooms now also can double as pet-washing areas.
Terry Story: That’s important [LAUGH].
Steve Pomeranz: [LAUGH] Also the dining room has a different use, right?
Terry Story: Absolutely, no one uses the dining room anymore. I mean, everyone uses them for their home offices, kid’s homework, another room to just walk by.
Steve Pomeranz: Yeah, [LAUGH] well, the thing is that it’s a multi-use room now.
Terry Story: Yeah, you can sit in a library.
Steve Pomeranz: That’s right, you set, or a little entertainment center or something of that nature.
Terry Story: Right.
Steve Pomeranz: Yeah, now also for city dwellers, I remember in the 80s, there was this trend towards converting these kinds of warehouse spaces or these lofts into dwelling apartments, so to speak. And that’s very popular now because people don’t want to drive anymore especially in the cities.
Terry Story: That’s right.
Steve Pomeranz: They want access to restaurants and culture, and so that’s very good.
Terry Story: And they look really cool, those warehouses turned into apartments.
Steve Pomeranz: They do, yeah, though, I don’t know.
Terry Story: I’m not in, I don’t like the-
Steve Pomeranz: Yes [LAUGH].
Terry Story: You see the AC vents.
Steve Pomeranz: Yeah.
Terry Story: Open, it’s a little too open for me.
Steve Pomeranz: That’s not for me. Also people are using it for creative pursuits. This idea, what they’re calling the maker-movement where people are taking hobbies and making profitable small businesses out of them.
Terry Story: Sure.
Steve Pomeranz: Yeah, so people are using their homes differently and that’s very important and that’s the new style and you’re starting to see that, I know, in South Florida as well.
Terry Story: Absolutely.
Steve Pomeranz: My guest as always is Terry Story, a 30-year veteran with Keller Williams located in Boca Raton, and she can be found at terrystory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.
