With Terry Story, 26-year Veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
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This week, Terry talks about a return to “normal” in the housing market after the best-year ever since 2007. So Terry believes the home-buying market will stabilize and slow down a little after rising sharply higher over the past few years. With a strong jobs report and clear signs that the U.S. economy appears to be getting back on its feet, Terry expects more millennials to enter the housing market, just as baby-boomers downsize as they enter retirement. Builders, who had earlier targeted higher-priced luxury homes, now see a trend reversal that makes affordable construction more appealing – to match the increased number of lower-paying jobs. As a result, markets with the highest prices could see some cooling.
And while the Federal Reserve has raised short-term interest rates, long-term interest rates remain really low by historic measures and continue to support the return to normalcy in housing. Moreover, high rental rates – with many renters paying more than 30% of their income towards rent – might also spur a move away from rentals to property ownership, especially if more affordable homes come to market that require a smaller down-payment – because in 75% of the U.S., it’s cheaper to own a home than pay monthly rent.
Terry also addresses the shortage in supply of homes for sale – with inventory at just 5.1 months across the U.S. Anything less than six months is a seller’s market because there is less inventory, solid demand, and prices could be bid up, especially if your home sits in a desirable neighborhood. That said, it may not always pay to downsize if you live in a state that rewards home ownership through lower taxes, or where downsizing does not really improve your overall quality of life.