With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL
During this week’s real estate roundup, Steve spoke with Terry Story, a 31-year veteran at Keller Williams Realty in Boca Raton, about the current state of the real estate marketplace.
A Journey Through The Current Marketplace
How is the housing marketplace looking right now? Terry answers that “According to the National Association of Realtors, prices are rising. The two main reasons for the rising prices are low-interest rates, which enables people to buy higher-priced properties, and low inventory, which keeps supply forces relatively lower and demand forces relatively higher.” In fact, as Steve observed, housing inventory dropped significantly in January, the biggest drop in four years.
“It’s crazy low, Steve,” Terry noted. “And it’s really challenging when I have a slew of buyers to work with and there’s such a limited amount of inventory out there.” Terry confessed that her approach has had to change because of the limited inventory. She used to tell people planning to buy a new home to “Go ahead and sell your house. We’ve got 60 days. I’ll find you something, no problem.” But now, she has to question them on where they’re looking to buy a new house. If they don’t have a plan as to where they’re going and when they need to be in, she has to make sure they have plan B in terms of having a place to stay temporarily until they can find and close on a new home. Are they prepared to put all their stuff in storage for a while?
Considerations For Homebuyers
Steve brought up a number of the things that people have to think about before giving up their current home in favor of buying a new one. For example, you’re going to lose or, at least, have to reset your homestead exemption. And since prices are on the rise, you’re likely going to get more for your current home, but then, in turn, you’re going to have to pay more for your new home, and with that higher price tag comes higher insurance payments and higher property taxes.
After thinking it all through, Steve was wondering why anyone goes looking for a new house. Terry reminded him though that there are always reasons that go beyond just the monetary considerations. Maybe somebody is just looking for their dream home or maybe they want to move to a location with better schools for their kids or they may be looking to move for some job-related reason.
Steve asked Terry to share with listeners what the home buying experience is like at the moment. Terry was happy to describe how she goes about helping homebuyers find their new home. “Well, we get together with them, and we have a consultation to find out what they’re looking for. Then I usually show them the different types of housing that’s available in each area—the east part of town, the west part of town, the central part of town. Then, once I’ve got a clear idea of what they’re looking for, we then start to geographically determine an area. We’ll circle that and educate them on that area, take them through it, and gradually narrow things down. Then, with the current low inventory market, it’s usually kind of a wait and see thing. When a new property comes on the market these days, and it’s priced right, you get this rush of buyers that have been waiting. You definitely see a lot of multiple offer situations, so an important part of my job is helping the homebuyer come up with a good offer. You don’t want to overspend, of course, but if they really want the home, you don’t want to miss out because your offer was too low compared to someone else’s.”
Price Points Matter
With the current state of the market, price points matter. Terry explained, “There are gradations of the marketplace. A layperson would just see a residential home as a home. But homes sell differently at different price levels.”. Homes in the $250,000 to $750,000 range are in a different marketplace than homes in the $750,000 to $1 million range.
On top of this, homes in different geographical markets sell differently. Home listings in Orlando, for example, are down nearly 16%. Miami, Fort Lauderdale, West Palm Beach are down about 12%. Again, it’s the issue of low inventory. “The number of realtors selling in Florida has increased because people look at the number of homes being sold in the past and are impressed. But now, we have more realtors and less homes. So, there’s more people chasing fewer sales,” said Terry.
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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 sunny Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thank you, Steve.
Steve Pomeranz: Glad to have you in the studio today. What is the current situation? What is the current course of the marketplace? Are prices rising steady or falling short?
Terry Story: According to the national association, the prices are rising. They actually rose 2.9%. We keep talking as to why, the reasons being low-interest rates and low inventory.
Steve Pomeranz: Yeah, it’s a good combination, but this low inventory is really getting even lower because I understand that housing inventory dropped in January, the most that it has in four years.
Terry Story: Crazy low, Steve. It’s challenging when I have a slew of buyers to work with and there’s such a little inventory out there.
Steve Pomeranz: These buyers that you have, are they people who have sold their house and now they’re re-looking, or they are a lot of them coming in from out of state?
Terry Story: You know, it’s really a combination of everything. One of my most recent customers, we sold their house and I’m very fortunate for them that the buyer was coming in from out of state, wasn’t ready to move in and let them stay there to rent so that they could find a place. And it took us three months to find a place. I mean, that hasn’t happened in a long time. Usually, I’ll tell people, go ahead and sell your house. We’ve got 60 days, I’ll find you something. No problem. And now when I meet with the seller and they want to sell their house, and I ask them, where are you going? And they don’t quite know yet where they’re going. That’s when I say to them, listen, we need a plan B. That plan B is where are you going to go temporarily? Are you prepared to put all your stuff in storage and move in with someone or stay at a hotel or a timeshare or what have you until we secure something for you. So that’s the reality of what I’m seeing in my marketplace.
Steve Pomeranz: When you’re sitting here listening to this and you say, well, I guess my house, let’s say I bought my house 15 years ago and it’s appreciated nicely. I’m hearing my neighbors are selling for X, I paid X minus something. You go, “Well, wait a minute, first of all, so I’m going to move to another house. I’m going to have to pay more for that house.”
Terry Story: Right.
Steve Pomeranz: My taxes are going to go up because I’m going to lose my homestead exemption or reset my homestead.
Terry Story: Or reset it, sure.
Steve Pomeranz: And then also what, mortgage rates are down. So that may be a positive from where I was. So my taxes are … I said my taxes are going to go up, my insurance is going to go up.
Terry Story: That’s assuming you’re upgrading.
Steve Pomeranz: All right. But even if I try to find something even, it’s going to be very difficult to do. And so why would I sell if I have to find something at the same price?
Terry Story: Well, there’s always an underlying reason why people sell. For example, school districts.
Steve Pomeranz: Okay.
Terry Story: So for some people, if they’re not in a good school district and their kids are becoming of school age and the cost of private tuition is 12,000 and they have three kids, 36,000. They’re packing their bags and looking to get into the school district. So that’s just one example. And people buy real estate … A home is your castle and sometimes cost isn’t that big of a factor. They’re more concerned about the location. They may be in a location that they don’t find desirable anymore. They want to be closer to work, so to save on commute time. So there’s lots of other variables that people will do that for.
Steve Pomeranz: All right. So just on price alone though, it’s not enough to spur anybody to do anything. But with these other factors, they’re a more powerful force.
Terry Story: They’re very powerful forces. Yes.
Steve Pomeranz: All right. So we know that housing inventory is at this all-time low. Now we’ve been talking about low inventory for 10 years.
Terry Story: Yes. It’s still low.
Steve Pomeranz: It seems to be getting worse. So when you mentioned this a little bit, but when you are now going, when you get a new buyer, what’s that experience like in your marketplace?
Terry Story: Well, it’s real easy because we get together with them, we have a consultation, we find out what they’re looking for, we’ll show them, and it depends on how savvy they are and when and if they know what they’re looking for, but I’m assuming it’s somebody coming into the area. We would do a consult, show them the different types of housings, in the east part of town, the west part of town, the central part of town.
Find out what is it that they’re looking for and then start to geographically determine an area and then circle that, educate them on that area, take them through it, narrow it down to that. And then it’s kind of a wait and see. And so what happens, Steve, is when a new property comes on the market and it’s priced right and you have all these buyers that are on the fence in the wait and see, and the property does hit the market, the buyers rush to it. And we are still seeing multiple offers. I just had another one. I sold it twice now, multiple offers. Oh, and by the way, over asking.
Steve Pomeranz: Over asking.
Terry Story: Now that was an entry-level price point, so price point matters too.
Steve Pomeranz: Yeah, that’s another thing. I mean, there’s gradations of the marketplace. I mean, a layperson would say, well, it’s just real estate or it’s just residential homes. But no, they are homes that are from around 200,000 that are priced in a different way. It’s a different marketplace. Up to 750 is another one. 750 and above is another.
Terry Story: Right. And then multi-million dollar properties.
Steve Pomeranz: So let’s talk about some of these housing markets in Florida where active listings are really plummeting because you said the average was over 13%. In Tampa and St. Pete, Clearwater, the listings are down 20% with four fewer days on the market. What are some of the other ones?
Terry Story: Yeah, so the Orlando area, they’re down almost 16% and then Miami, Fort Lauderdale, West Palm is down, which is our marketplace, down 12% yes. So think of it from the perspective of an agent. So, the real estate market’s gotten hot and everybody has a Florida driver’s license and a Florida real estate license. And so the number of realtors has been increasing over the years because there’s like, wow, look at all this real estate being sold. So there’s more realtors and now we have less inventory. So there’s more people chasing less sales.
Steve Pomeranz: Prices rise.
Terry Story: Prices rise.
Steve Pomeranz: Interest rates are lower.
Terry Story: And they all bail. And I love that market.
Steve Pomeranz: Well, being a financial advisor, it was always great to have a good bear market because all of the light players, the advisors, so to speak, or the brokers, whatever they call themselves, they would disappear because-
Terry Story: The weekend warriors.
Steve Pomeranz: Well, the easy money is gone.
Terry Story: Exactly.
Steve Pomeranz: Exactly. My guest, as always is 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.