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Signs Of Health In Housing

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Terry Story, healthy housing

With Terry Story, 26-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL

In today’s segment, Terry Story discusses how the housing market is healthy once again and has come back to what is considered to be a normal level. She and Steve see NO signs of a bubble in the housing market and discuss a number of reasons for their opinion.

Terry points out that the Millennials are “leading the charge” and are having a significant impact on housing sales. She also notes that home ownership is less expensive, in many cases, than renting which adds to the notable trend of higher sales in the market.


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.

Read The Entire Transcript Here

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 26-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 wrote and sent to me 5 real estate trends that will dominate 2016.  Tell me about them.

Terry Story: Normal is coming.  First thing.

Steve Pomeranz: It’s not the new normal or the old normal, it’s just normal?

Terry Story: It’s normal, whatever normal is.  We’ve lived through 15 years of truly abnormal trends, and we’re expecting for a healthy growth in home sales and pricing at a pace a little bit slower than 2015.  We’re going to see new construction, and distress sales are expected to return to more historic levels, so that’s what I mean more normal is coming.

Steve Pomeranz: Yeah, we’ve had the tremendous run up in the first half of the decade, of the 2000 to 2006, and then we had the big bubble burst, then we’ve had some very fast growth from that point in time. Now things seem to be leveling off and going back to those days before the craziness.

Terry Story: That’s right.  The next trend is the generational buying trend of shape up.

Steve Pomeranz: What does that mean?

Terry Story: We know there’s these millennials, making up nearly $2 million sales in 2015, which represented a third of all the home buying. So this is a big group and a major buying pool, and we expect them to come out and purchase.  Now we’ve talked about this in the past, there’s this struggle that they have with low levels of inventory, but when the inventory is loosened up, they’re out there to buy and they will be buying.  And, as I said, they are buying in a big way.

Steve Pomeranz: Also, we had an employment report last week that basically stated that job creation is going on at a pretty healthy pace, and unemployment levels are still low.  There’s a lot of debate about the quality of the employment, and, so on, but that aside, more people working, it’s better for the economy and it means more homes will be bought.

Terry Story: That’s right.  This will lead to new home construction, which will focus more on affordability. In the past, we have talked about the fact that the cost of building a new home has gotten really high because of regulations that builders are required to enforce. Builders are also faced with higher land costs and limited labor so they are working to try to build more affordable homes that are more attractive for that entry-level buyer.

Terry Story: Then, of course, higher mortgage rates.  Mortgage rates are very low in 2016, but we know at some point they are going to start to rise.  The rate that they’re rising is manageable and reasonable, so that it’s still keeping it very affordable to buy a home.  The other big trend …

Steve Pomeranz: Well, hold on before you go on.  People have been expecting interest rates to rise now for about 3 years. It has not happened, and I can say that unless we see a surprising uptick in inflation, interest rates are probably not going to continue to rise for a long period of time. I have no crystal ball here, but I don’t see anything pushing interest rates or mortgage rates higher at this point.

Terry Story: Yeah, and I’m fine with that, I like it the way it is.

Steve Pomeranz: I bet you do.

Terry Story: Makes it affordable.

Steve Pomeranz: Right, right.

Terry Story: Then, of course, rents have been going up, and they’re going to continue to rise.  That’s the trend, and that’s why so many young folks and renters, if they are able to save money and their credit is decent, can purchase homes. And, you know, due to lower interest rates, the rents in many cases are higher than a mortgage payment.

Steve Pomeranz: We talked in times past that a lot of people don’t even look to see if they can buy because they think they can’t either qualify or they don’t have a big enough down payment. We were trying to dispel that myth a few weeks ago, right?

Terry Story: That’s right. All they have to do is call a lender and find out where they with their credit scores, and they might be surprised.

Steve Pomeranz: Sometimes you only have to put 3% down or, so it may not be quite as much as you think. All right, let’s go to our real estate survival guide, this is the Ask a Real Estate Pro Segment.

Steve Pomeranz: Here’s the question.  “I live in a condominium, who maintains my front door?”

Terry Story: You know the answer is always going to be in condominium documents, but, for the most part, most declarations provide that the association maintains the door and all the exterior surfaces, and the owners are responsible for the unfinished interior surface of the door.  Well, you think about it, Steve, in South Florida, we have a lot of old condos that have the old jalousie windows.

Steve Pomeranz: I remember.

Terry Story: The condo association or the owner decides to change the windows or doors, but the owner wants to change to a different kind of door or shape. The association will want the doors uniform. The association has the responsibility to maintain those front doors.

Steve Pomeranz: Okay, wel we only have a few minutes leftand one point that people seem to ask me all the time is whether the housing market is in a bubble.

Is housing in a bubble, Terry?

Terry Story: Nonsense.  A couple of quick reasons: 1) Mortgage credit scores.  You need a much higher score than you did in the past.  2) Those no doc requirements, the sub-prime mortgages, they’re way gone.  We don’t do those anymore.

Steve Pomeranz: Yeah.

Terry Story: Three, right now the mortgage rate takes up to 15% of a person’s gross income.  During the bubble, it would take up to 25% of their income to buy a house.

Steve Pomeranz: Mm-hmm (affirmative).

Terry Story: Even though the inventory levels are still the same, the major difference here than back in 2006 is we were selling homes at a rate of 8.4 million homes a year.  We’re only at 5.76 million, that’s a third less than we did back in 2006.

Steve Pomeranz: And you know, let’s face it, a bubble is something that is unique, it’s really very rare, markets can go up, housing inventory and prices can rise or fall, but it doesn’t necessarily mean you’re in a bubble.  A bubble is when everybody is hypnotized and they think “trees are going to grow to the sky” (as the expression goes) and it’s a “new day and a new daw” and we’re not seeing any of that in today’s housing market.

My guest as always is Terry Story. Terry is a 26-year veteran with Coldwell Banker located in Boca Raton, and she can always be found at terrystory.com.