With Terry Story, 28-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL
When the numbers come in, sometimes it’s good to pay attention, especially if you’re in the real estate market and the numbers in question relate to record highs.
Terry Story, our resident 28-year agent with Coldwell Banker, reports a 25% gain in housing starts, which is new construction. “That's the highest level since August of 2007, according to the Commerce Department last week”, says Terry. “This is actually the greatest percentage gain since July of 1982.”
In September of ’82, the Federal Reserve started to reduce rates which precipitated the great bull market of the ‘80s and ‘90s, and here we are coming into 2017 back at record levels.
The highest surge in housing starts has been with single family homes, up 10.7% of all new construction. In the South Florida market, this hasn’t been so apparent because there’s not much land on which to build, unless you go farther north and west. What is evident in South Florida, however, are a lot of home renovations, high rises, and rental units.
Although it’s impossible to know if this upward trend will last, Terry points out that historically these construction projects do have a certain amount of economic endurance. Throughout the process, building materials, furniture, and appliances, for instance, are being bought—an example of trickle-down economics at work.
Again, for the South Florida market, inventory remains low and prices remain high, which has created a state of stagnation since many properties just aren’t saleable; there’s little to buy at fair market value.
Interest rates may have a big impact on all of this very soon as we’re seeing rates on 10-year treasury notes increase, foreshadowing an uptick in home mortgage rates and making it more expensive to buy a home. On the other side, it may also bring home prices back down to a more realistic range for buyers.
For the next several years, the movement in the real estate market will most likely be defined by two diverse age groups: older millennials (between 25 to 35 years old) will be out there buying new homes as baby boomers (the 65-year-old age group) will be selling and then downsizing into smaller homes or rentals.
So lots of movement ahead in the housing world, according to all the data.