With Terry Story, 30-year veteran Real Estate Agent with Keller Williams in Boca Raton, FL
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Steve kicks off Real Estate Round-Up by congratulating Terry Story on completing 30 years as a real estate agent. Terry responds, “Still doing it, still liking it!”
August Housing Starts Rise
The big and pleasant surprise this week was that housing starts were up 9.2% in August. Most of the new construction was focused on multi-family housing and condos, with very little towards new single-family homes. Still, this is welcome news because new construction should result in more housing inventory, which has been a sore point over the past few years.
Housing Permits Drop
Housing permits, though, were down 5.7%. The drop in permits reflects the rising cost of land, labor, and materials. Trump’s tariffs could also have played a role due to the rising cost of lumber imports from Canada.
Older Homeowners Not Selling
Reverting to an old theme, new data suggests older homeowners are holding off on downsizing to smaller, more affordable homes. Part of the reason is that their kids are moving back—again, partly due to rising housing costs and tight inventory. As a result, the average age of downsizing has soared to 80.
Moreover, millennials and investors are clashing with seniors for smaller, lower cost homes. As a result, seniors do not see a real benefit to downsizing due to the lack of suitable homes.
Rising Sea Levels Wallop Property Prices
Where once beachfront property was considered prime real estate, rising sea levels are changing things dramatically. Homes in eight U.S. states have lost $14.1 billion in market value due to rising sea levels, rising river levels, floods, etc.
Florida leads the pack in almost every category. The other states include Georgia, North Carolina, South Carolina, Virginia; and in the tristate area of New Jersey, New York, and Connecticut, pricey homes lost $7 billion in value. Homes in Ocean City, New Jersey lost $530 million versus $337 million lost in the Miami Beach area.
Steve adds that insurance premiums should go up for homes in high-risk areas.
Buyers Checking Financing Before Approaching Realtors
In other news, home buyers now appear to be checking their finances before heading off to meet realtors. By doing so, buyers know exactly what they’re getting into financially and come to realtors with realistic expectations of what they can afford to buy. This streamlines the process for everyone and makes the shopping experience much nicer.
As Terry says, “when you look for a home that’s in your price budget, you won’t be disappointed when you look at something that’s more expensive that you can’t afford.”
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 Roundup. This is the time, every single week, we get together with noted real estate agent, Terry Story. Terry is 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: 30 years, congratulations.
Terry Story: Yay!
Steve Pomeranz: Wow.
Terry Story: Still doing it. Still liking it.
Steve Pomeranz: Well, that’s more important. Getting to the current news, this is important. August housing starts were up 9.2% and housing permits were down 5.7%. We’re going to get to that in a minute, but there was a big surprise, that housing starts were up 9.2%, that’s good nice, right?
Terry Story: Yeah, absolutely, we need new construction, we need new houses, we need more inventory, so this is excellent.
Steve Pomeranz: Right.
Terry Story: Good news.
Steve Pomeranz: Drilling down a little deeper [crosstalk 00:00:46]
Terry Story: I already know the ones … Where this goes.
Steve Pomeranz: Most of that increase was for multi-family housing, rentals, that could also include condos and the like.
Terry Story: Right.
Steve Pomeranz: But only 1.9% increase in-
Terry Story: Single-family homes.
Steve Pomeranz: Yeah.
Terry Story: So, that’s not much for the single-family homes.
Steve Pomeranz: I know.
Terry Story: If you want to move to multi-family property, we’ve got plenty of it coming. Stay tuned.
Steve Pomeranz: Well, you know they just keep building those rental properties.
Terry Story: Yeah.
Steve Pomeranz: Right? Because they must be profitable but at some time, they’re going to be overbuilt.
Terry Story: And then, they’ll just convert them to condos.
Steve Pomeranz: Yeah.
Terry Story: And then they’ll switch them back.
Steve Pomeranz: You’re so cynical.
Terry Story: It’s true.
Steve Pomeranz: However, housing permits were down 5.7%, that’s not good.
Terry Story: No, that’s telling you that they see things are flattening a little bit, the cost of the land, labor, materials are rising, so there’s a little bit of a pullback there.
Steve Pomeranz: Something about a pullback, and you know, maybe tariffs have had little bit to do with this because of rising lumber prices, and things like that. The labor shortage, that you just mentioned, it’s hard to find people who want to be plumbers and electricians [crosstalk 00:01:53]
Terry Story: I’ll tell you, you can make a lot of money. I know some very wealthy plumbers.
Steve Pomeranz: Mm-hmm (affirmative). Yeah. Well, they own the plumbing company.
Terry Story: I know. But he didn’t own the plumbing company without being the plumber.
Steve Pomeranz: Well you gotta start somewhere.
Terry Story: Start at the bottom.
Steve Pomeranz: Yeah, there’s no question about that, and also, land prices have risen as well.
Terry Story: I just had a plumbing problem and the guy came out and I saw how high that bill was, I went, “Whoa, I should become a plumber.”
Steve Pomeranz: That’s probably a sign of a toppling real estate market, when you’re starting to complain about your plumber’s cost. All right, so let’s move on here. We’ve talked about this before, but older homeowners are delaying down-sizing. They’re not moving; the idea is, the meme is, you have your house for your children to bring up your family, it’s nice and big, family moves out, and after a while then..
Terry Story: And, family moves back.
Steve Pomeranz: Okay, well, let me finish my part first, you already said the punchline, but the bottom line is, basically, that there’s this idea, there’s just the two of you, and you’re going to now down-size into something smaller, something more affordable.
Terry Story: Right.
Steve Pomeranz: If you’ve built up equity over those years, you can take out that excess equity now because you bought-
Terry Story: Travel.
Steve Pomeranz: … Sure, you can do all those things that you dream about.
Terry Story: Yup.
Steve Pomeranz: But, then something happened, and kids move back.
Terry Story: They move back.
Steve Pomeranz: Yeah, what do you mean?
Terry Story: Well, it’s very common, and this is a true scenario, that the senior people are trying to move out, and they’ve got their grown children moving back in. The average age now, of people down-sizing is 80.
Steve Pomeranz: Wow.
Terry Story: Now, they’re working longer.
Steve Pomeranz: Yes, so that’s-
Terry Story: So, they don’t need the finance-
Steve Pomeranz: Assistance.
Terry Story: … Assistance, so they’re just staying where they’re at. And then, they make it really cushy and the kids come back.
Steve Pomeranz: I got no more comment on that, I think it speaks for itself.
Terry Story: Yeah.
Steve Pomeranz: All right, so, that idea has changed, then. People hit age 65, age 70, they move and so on, but that’s now being delayed.
Terry Story: It’s being delayed, it’s closer to 80. Here’s the problem, now you have the millennials clashing with the seniors, and they’re all fighting for the smaller homes. So, you’ve got investors, first-time home buyers, and seniors all fighting for that 300-thousand-dollar home in our area.
Steve Pomeranz: Yeah.
Terry Story: So-
Steve Pomeranz: Well, maybe that’s why they’re building more multi-family housing.
Terry Story: That could be.
Steve Pomeranz: Okay.
Terry Story: To accommodate this.
Steve Pomeranz: So, you can buy a decent place for 300 thousand.
Terry Story: You can buy two of them.
Steve Pomeranz: You can buy two of them. Another very interesting fact, is that homes in eight states have lost billions in potential value based upon rising sea levels, rising river levels, rain and so on, so tell us about that.
Terry Story: Yeah, so you’re looking at 14.1 billion in lost values, according to a new study. And, that’s high. 7.4 billion in home value appreciation was swept away just in five states. Of course, Florida always leads the pack in almost every category. So, you’re looking at Florida, Georgia, North Carolina, South Carolina, and Virginia. But, interestingly enough, Steve, in the tri-county states, which is New Jersey, New York, Connecticut, they lost seven billion-
Steve Pomeranz: Just in those three.
Terry Story: Just those three.
Steve Pomeranz: Yeah, yeah.
Terry Story: And, then at the same time, then you look at … speaking of New Jersey, Ocean City, New Jersey, they lost 530 million dollars versus Miami Beach, for example, which was more like 337.
Steve Pomeranz: I think the point here is that you expect it from Florida because Florida is known for weather and high seas at times and hurricanes, of course. But, you don’t really expect it in Connecticut.
Terry Story: Right.
Steve Pomeranz: That’s the difference.
Terry Story: And the difference is their real estate values are so much greater than ours.
Steve Pomeranz: Yes.
Terry Story: So, that’s why the numbers are higher in those states.
Steve Pomeranz: That’s a good point. well, so it’s making a case. It’s interesting because the bottom line really should be whether the insurance companies are charging more or not. I don’t know the answer to that, but I mean, that’s really where you can see how the statistics really work because insurance companies are going to price their premiums based upon where you live and what the risks are. So watch out if you’re living in this tri-state area, now, right?
Terry Story: Yup.
Steve Pomeranz: Okay. Another change that we’re seeing is that people are checking on their financing first, before they come and see you, the realtor.
Terry Story: So smart. We’ve always preached that when somebody comes to us, first thing we do is put them in touch with a lender. Lot of them now are doing it on their own; they finally got the message, this is what we need to do first. So, by doing that, they’re fully aware what their costs are going to be what they can afford, so it makes the shopping experience a lot better. When you look for a home that’s in your price budget, then you won’t be disappointed when you look at something that’s more expensive that you can’t afford, and now you really want that, but you can’t afford it, so.
Steve Pomeranz: Why does the realtor show that property first?
Terry Story: It’s a strategy.
Steve Pomeranz: I know it is, I know, it’s called anchoring. We’ll get into that in another episode. Unfortunately, we are out of time. 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
Terry Story: Thanks for having me, Steve.
