This Episode: The Housing Market | Are We Truly Doomed?
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John:
Hi John Harrison, Brittivia Homes and Construction Inc. and today’s the day.
The first episode of Built Different Podcast and what are we gonna do on this podcast?
We’re gonna actually dive into how to do certain things in construction.
How construction budgets should go. How different markets are. And actually,
talk about the knowledge I’ve gotten over the last 25 years doing construction.
My mom and dad were both licensed contractors and it was a different house growing up.
Biggest thing they taught me as a contractor was don’t tell people you’re perfect
cause no one is tell them you’ll go back until they’re completely satisfied.
And that’s kind of what we’ve built this whole business on,
but to start this podcast I’m pretty excited.
Why?
Because everybody has questions about construction or their house you
live in a house and you wonder how is that done? Could I save if I just
did a portion of the project? But what a lot of people are talking
about right now our interest rates, what their houses worth,
value of the land they live on…
And we’re so blessed we have someone who’s been in that industry for 15 years.
His family’s been doing it for 100. And I’m so thankful to have Taylor Healy with us
from Foster-Healy Real Estate. Taylor how are you?
Taylor:
John how’s it going? Thanks for having me be your first guest. I’m Taylor Healy I’m
with Foster-Healy Real Estate. I’m third generation at our company. The company’s been around for 100 years as John says, my family’s been running the company since the 70s
when my grandfather bought the company. I started in it 15 years ago and
never looked back.
John:
Well you’re kind of a staple in this area if you in Leominster, Fitchburg, Lunenburg,
Westminster, Gardner, all those surrounding towns I see red signs everywhere.
Taylor:
Yep, we got gotta have all over North Central Mass.
John:
And so you had your thumb on the real estate market for that long and tell me what
you see as you’ve been doing it for the last 15 years.
Taylor:
There’s always been ups and downs in the market always subject to things like,
years ago when I first started we were really into the it was a lot of
foreclosure properties at that time there have been a bit of a market
crash way back then. But we’ve seen a steady climb and then we obviously had
some wild times few years ago during Covid when the rates were just obscenely low.
But it’s been a nice steady increase in values over the last few years and it’s
been quite a ride.
John:
So specifically right now.
Taylor:
Yep
John:
With interest rates and prices…
I’m a guy I’m 30 years old I put together a little nest egg to buy a house
do you think right now is a good time to buy?
Taylor:
Absolutely the right time. Obviously my answer to people is always the right time
to buy a house is when you’re ready to buy a house. People always have different
life events that influence their decisions. A lot of people over the last couple
years have held off on that decision just because of where the interest rates
have been.
So you’ve got a lot of pent up demand for household formations. People have
gotten married, people have had their kids move out they’re looking to downsize,
but everyone’s been stuck in place because of the interest rates where values have
been so high that newer buyers have been having a hard time buying a house and
people who have been in their house for a long time have hard time selling because
they be buying with a higher interest rate. But right now we’re noticing that
it’s leveled off.
It’s… We’re not gonna see those 2-3% rates for who knows how long, if ever again.
But it doesn’t seem as though we’re gonna see crazy spikes in them so right now
is a great time to buy because, if those rates do start to creep up you’re locked
in at a lower rate if the rates go down you can always refinance but your value
is gonna go up. When the rates go down prices tend to go up.
So if you can get your foot in the door right now, you can my dad always likes to say, “You date the rate you marry the house.” So you find a house you love you buy it
now and you can always go refinance later if the rates dip down. And if the rates
don’t go down and the prices go up then you look great because you bought a house
for a way lower price.
John:
Yeah, yeah, no if I go back in my own home journey for the different houses I’ve
owned and sold and bought my first interest rate was 7.25% and I couldn’t get
the pen off quick enough to sign the bank paper. It’s so funny how how that or my
dad bought a motor court and his interest rate was 17%.
Taylor:
(laughs)
My dad always tells me that when he was selling in the 80s early 90s when the
rates were high teens I think it was he always said if you get below 15%
he’d be able to sell anything.
John:
My how things have changed. And that’s kind of funny you you know what I’m noticing
a lot more in the industry though? And and tell me if it’s an actual trend that
I’m noticing but I’m seeing I go on realtor.com all the time. I try to keep my
thumb on this area as market as best I can. It’s where my house is. It’s where
some other real estate I own is. And I’m noticing when I see a house
price a lot of times right to the right of the house price on realtor.com there’s
a green number with a minus sign next to it and it’s down 5 grand, it’s down
15 grand, it’s down 20 grand. Have you noticed that at all are you seeing anything
like that?
Taylor:
I’ve definitely noticed a lot more of that. You know you look back a couple
years ago especially in the heart of Covid when prices were just going through
the roof. There are a lot of sellers that are still caught in that mindset that wherever I price my house it’s still going up. It’s definitely
leveled off. So you got a lot of sellers that are trying to ride that wave
that are still pricing expecting the numbers to keep going up but we’re not
seeing that. So those people that have priced them on the high end we’re
seeing that that is ticking down a bit. Also you look at the time of year.
Winter is typically the slowest time of year. So things sit on the market
a little bit longer. It’s not something that I typically get too worked up
with with my sellers. You know just because of the timing but at the same time
it is something that the longer houses on the market the more people get…
their motivations change and that’s when you start seeing those dips down in
prices so I think a lot of it was we had sellers that were…
John:
Continuing on that wave…
Taylor:
But the wave is kind of leveled off.
John:
That makes sense.
Taylor:
So we’re not seeing their crazy appreciations, although I will say there are
markets that we are still seeing those crazy appreciations. Although it’s slow…
John:
Is it more of a town by town thing in that case? Or a city by town?
Taylor:
Absolutely, you look at cities like Fitchburg or Gardner they’re still riding
that wave pretty well higher. Towns that are viewed more as the higher end
towns, you look at Lunenburg or Princeton. Those towns they’ve certainly
leveled off quite a bit. There’s obviously gonna be outliers on those houses
that sold for crazy numbers but overall those towns of more so leveled off. It’s
the towns that are have historically been viewed as the affordable options that
those are still getting such an influx of buyers that you are still seeing
more appreciation.
John:
I wanna talk about a couple of the properties I saw one in particular where
it was priced and over the last 30 days it came down about $15,000 so what
I did and I’m not saying this is the market I’m just saying it happens to be a
house in this general vicinity that I looked at. And if you were to take the
original price of the house and you put it with the interest rate back in
2022, 2023. And then you take what it reduced down to after the 6.4% that it’s
at now. There’s about $190 more you’d be paying now but your down payment would
be $3,000 less right and you’re paying $190 more. Now let’s just say we all
know interest rates are going down. I happen to be excited about what’s going
on with the whole country right now. And at one point it’s gonna trickle down
into the interest rates, and I believe they’re gonna come down. Who knows if
it’s three years, four years, five years? Who knows? But let’s just say it was
four years and you bought right now and they went down you’re saving $3,000
on your down payment and about $5,000 on your monthly payments that you’ve paid
over the last four years so it’s an $8,000 savings if it comes down. Like you
said if it goes up on the inverse…
Taylor:
Your locked in at a at a better rate then.
John:
Exactly and it was just something I happened to look at and throw some numbers to.
It could be an outlier and it probably is…
Taylor:
I think we all hope the interest rates go down who knows there’s so much turmoil
in the world right now.
John:
There is.
Taylor:
It’s just no predicting it seems like but at very least the way I look at it and
what I’m seeing a lot of economist projecting is we’re at least gonna see
stabilizing of it. I think there’s a lot of optimism that it could potentially go
down. I think if we can get the economy a little more under control we’ll start to
see that and that would be wonderful for all of us.
John:
So let me ask you this as a seller in the current market. I’m a seller, what
the current conditions tell me a little bit about how you feel about that?
Taylor:
I think it’s a great time to sell. There is very limited inventory on the market
rate now there are so few houses, so when you’ve got buyers that are out there
looking, there’s always gonna be buyers looking because people have life events.
There’s always gonna be a reason that someone needs to buy a house. When they
have so few options, it puts a seller in a really good position where
“Hey I’ve got a limited commodity that people want.” So as a seller it’s great.
You look at the prices right now they’re still selling at inflated prices over
a few years ago so a lot of people who are selling right now they’ve been in
their houses 10-20 years they’ve built up incredible equity so they’re gonna
leave and they’re gonna walk away from the deal with a considerable amount of
money that they can then use to move on to the next phase of their life.
John:
So that makes sense. I feel the same way. I did notice I happen to be a listening
to a Reel and it talked about how the mortgages from 2022 and 2023 have gone
down about 75% the amount of mortgages than where they’re at right now. And I
just didn’t know what that translates into other than what you said that
there’s a limited market so people aren’t out applying for mortgages.
Taylor:
That’s the main thing is and also the refinances as well. When you look at the
number of mortgages that were written back then it was at everyone was
refinancing to get into these, in some cases below 3% rates. Right now the
refinance market market is considerably limited because if you’re sitting in
your house at 2.5%-3% you’re not refinancing at 6.5%-6.8%. Not to mention there
were just a lot more home purchases the market was wild during those years.
John:
Yeah and mostly because of the rate.
Taylor:
Exactly.
John:
I am so glad you explained that because sellers might look at that and think
“Well maybe now isn’t a good time to sell.” But the way you just explain that and
how I feel as well with the limited amount of inventory…
I have a house up in New Hampshire then I’m in the process of selling and we’re
noticing tons of people coming we haven’t touched the price. And we know we’re
gonna get our number and people are starting to realize…
The person that I saw on the Reel was trying to say “Well that means that it’s
a disaster”, but it doesn’t. It just means less people are getting mortgages
there’s still a great market out there.
Taylor:
You look at days on market like you’re talking about there. Days on market
especially this time of year, I put a lot less weight on. You look back, if you
went back five years ago when everything was selling the day it hit the market,
if something was on the market for two three months it was, “What’s wrong here?”
This we’re now getting back to a little bit more of a normalized market when I
started years ago you see house on the market 80-90 days and you never think
twice about that. So now we’re seeing a little bit more of that. Especially this
time of year too. Winter is the the slow time historically.
John:
Were coming out of that now.
Taylor:
So those days on market are less concerning to me at this point than they would
have been 2-3 years ago. And I’ve seen the same thing where listings that I’d seen
that had very little activity for months all of a sudden they’re getting hot.
John:
I wanna dive into a little bit different market or question in that same thing
I’m getting into the purchase mode and I put together a nest egg or I’m selling
and it’s a multi family I know that’s a whole different market. So I want to get
your thoughts on both sides of that as a buyer or seller where do you think we are?
And either way whatever the data tells you let me know.
Taylor:
Multi families are a fantastic investment. I know people who have made up killing
with them. If you buy a multi family, right now your looking at the super
limited rental market. There is so few units out there for the demand, for
how many people are looking to rent apartments or space in a house. There is
just not enough out there. So people who are buying these multi families are able
to rent them out in a heartbeat.
They get a million applications on day one and they’re getting rents that are just
off the charts. So as a either owner occupant, which is a great way for someone to
get their foot in the door for owning real estate. You own a multi family and
you’re renting out the other units it’s great for a newer home buyer because they
can keep an eye on the whole property. Nut as an investor buying multi families
it’s just a wonderful way to build equity the value on these buildings just
keeps going up and the amount that they’re getting for return on their
investment through the rents is continuing to rise as well.
John:
The owner occupied you really subsidizing big time. By having two people throwing
in on it, that’s positive cash flow.
Taylor:
Yes some people essentially they live in their house for free and they’re
pocketing some money because they’re able to do that.
John:
And seller, how do you feel about a seller on the market?
Taylor:
The market again is just so hot for them. If you have a multi family that
you’re looking to sell you’re gonna have buyers pretty much bang down
the door unless you know there’s always reasons why something might not be
that needs a ton of work or…
Although there’s still a huge market for properties to be fixed up there’s as
you obviously seen properties that need fixing up are in high demand as well.
So selling a multi family it’s probably a hotter market than selling a single family.
John:
Yeah I agree 100% with all that and it’s so cool that we’ve been able to talk
about the current real estate market but I want to talk about doing additions
and renovations and different home renovations that are out there. And there
are probably people out there who have thought about doing certain
things but there’s been a level of people being unsure in 2024.
And I think that’s come around when people are starting to realize that we’re not
in a position where we thought we were gonna be and they’re starting to consider things
like kitchen remodels and bath remodels. And if you look at remodel magazine
they have a cost-to-value report and it actually talks about a kitchen remodel
what it cost the to do the average one is somewhere around $24,000 and then your
equity immediately is $23,000 so it’s about or maybe it’s $25,000 is what it cost
$24,000 the equity about $1,000 difference. And so Taylor that’s when as soon
as you finish the project. Tell me what are your thoughts on doing a
kitchen remodel if you’re thinking of selling in the future and how that is far
as not only equity but as the time goes on how the equity gets better or worse?
And if you think it’s a good thing to do with homes this year.
Taylor:
Absolutely so doing any major renovations on a house there’s always obviously
there’s the expense that goes with it but the increased value is two separate things.
First off if you’re renovating a house for your own use the added benefit for
yourself the value you can’t even calculate that as a number adding a bedroom,
doing a new kitchen, making a nice primary bath, those sorts of things just
drastically change the way you live in a house and can improve your quality of
life majorly. But when you’re also looking at it from a resale point of view not
only does it increase your dollar value but you also gain value in time on market
a house that has brand new kitchens bathrooms, maybe an extra bedroom, adding a
garage those sorts of things those will reduce your time on the market because
your house becomes that much more valuable.
So it’s twofold it’s improving the house as far as livability but it is
absolutely increasing value. It increases what a house can appraise for adding
square footage is, it just increases the usability of space. Where you look
at sometimes some of these renovations for instance things you’ve done in the
past and houses that I’ve sold with you where you opened up walls, made rooms just
feel bigger, change the whole flow of a house. These projects that you can put
the dollar price off you can price what the work cost to do, but sometimes the
return is not even something you can calculate. If you’re flipping a house it’s
one thing you can see the value almost immediately, but for someone who’s living
in their house these changes you just can’t even calculate how much these are worth
because it changes how someone’s life is spent in the house.
John:
I think of holidays and you you cooking the turkey but you’re also able to talk
to Uncle Joe about about the football game coming up…
Taylor:
You don’t have the hole in the wall kitchen over the side. The kitchen is now the
heart of the house where everyone’s gathered around and that’s one thing I did
in my house was I blew up my kitchen made it wide open it was this little kind of
cubby space and now it’s where, my kids sit at the counter at the we got the
island they sit at the counter and do their homework where my wife and I are
cooking, and I like to think I do a decent amount of it but she’ll tell you that
she does all that. But that’s where we hang out we’re always around there and…
John:
It’s where the life of the houses.
Taylor:
We even opened up our kitchen to the living room. So yeah kids are in the back
living room watching TV we can be in the kitchen doing our thing, everyone
still together even though we’re in separate rooms.
John:
No that definitely makes a lot of sense. And I’m noticing on the Cost-to-Value
report the average front door almost doubles the value of your house.
Taylor:
First impressions.
John:
Even if you’re out here in your house and you’re like how can I freshen up the front
of it. You can actually double the value of what an average front door is by
changing it in equity so what you put in you get double that in equity.
Taylor:
First impressions.
John:
It’s so true.
Taylor:
If you walk up to a front door the doorknobs falling off. That’s creaky and
wobbly it’s not the same as a grand new entryway.
John:
And what about decks? Once again that’s kind of where life happens to in a
house, but it’s the outside where you actually can hear birds chirping and crickets.
Taylor:
A deck is it’s one of those things I think people get a great return on their value.
Because it’s increasing your living space at least for you know three quarters
of the year. You’re increasing your living space and were nowadays after,
post-COVID a lot less people…
You’re seeing people travel a little more but a lot more people vacation at home.
You’re using your outdoor space at your house a lot more. So having a nice deck to
go out on it’s just a great thing you walk out there light the grill have a
little barbecue get all the friends and family together and enjoy the weather.
Taylor:
Absolutely. No definitely I agree with that 100%. If you are thinking about
doing a remodel or a deck or a kitchen reno or bath reno we’ve been doing in a
long time would love to at least come over and take a look at what you got and give
you an idea of some numbers and then you make this the decision from there.
John:
So Taylor let’s talk about a new subject February 2nd of this year. ADUs or
accessory dwelling units that are not just in law apartments but they can be for
profit also, have become the new zoning law in virtually every lot anyone who
has a single family lot or, in towns, a multi family property can add an ADU to
it and we’ve been putting together some numbers and working out how we can keep
the budget in a in a position where there’s a lot of equity when the person’s
done with the project and I think we’ve dialed in some great ways
to do that. But tell me on your side if you have a single family home and you’re
getting older and your kids families are growing and you wanna keep them close
to home which is awesome, like right now I my brother and his nephew live right
next to me for that very reason and it is such a blessing. That being the case
when you’re done building out an ADU tell me about the equity that a house
would have after doing something like that.
Tayor:
An ADU or accessory dwelling unit which as you mentioned are historically called a
in law apartment. They are a wonderful value added you you look at as a family grows
and as we’re talking about who are sometimes looking to downsize. You might have
a family where the parents who’ve lived in the bigger house have younger kids
who’ve recently gotten married starting their own families the parents are looking
the downsize but always wanna be nearby. All of a sudden they have the ability to
have this accessory dwelling unit to move into and the kids move into the main
house. Likewise you have these units if you’ve got a single family house that you
have another little room with a kitchen and bathroom off the side that you can rent
out it is great way to subsidize your own mortgage and put maybe put a little money
in your pocket. And it really does help people especially when you look at this
economy everyone’s looking to make every extra dollar they can and we’re all trying
to get by, and having the ability to have that extra income or cash flows just to good.
John:
And the limited housing like we’ve been saying on market is crazy.
Taylor:
There’s absolutely not enough housing out there. Look at some states where
they’ve overbuilt I look down in Florida there’s these sprawling developments that
they can’t even sell all these houses, but up in the northeast here we are at such
a shortcoming on how much housing we have we need as many more units as we can.
John:
Once again thank you very much if you have any real estate needs whether it’s
multi families, or you’re buying your first house, or you’re buying your third house.
I just went through the process of buying a property with with Taylor and he brought
so much information to the table it was more than I wanted to know or read
but he actually went right to the important parts. He had them highlighted. He read
them to me then he explained them to me. So I went in as a very educated buyer
and that’s kind of what they bring to the table. So again thank you very much Taylor.
Taylor:
Thank you.
John:
So Taylor can you just tell people how they can get in touch with you?
Taylor:
Absolutely first off you could call my office any time you want our number is
978-537-8301 or you can call my cell phone directly 978-697-2712 or email me
at Taylor@Foster-Healey.com
John:
Thank you so much Taylor. And that kind of concludes most of our first podcast. And
I really encourage everyone out there if you could like and follow us that would
be really great. We would truly appreciate it, but more importantly if you can
comment. If you have some comments on the stuff we’ve discussed or your own
house and you’re thinking about putting an addition on and you have a question
about that put it in the comments. We’ll try to hit it in an upcoming
episode and we’re so thankful for you we’ll see you next week when we bring
something brand new to you. And you’ll see in some of our ads this coming
week what the subject will be, we have started to discuss it but we haven’t
put something together yet.
Thank you and have a great week.
Ready To Get Started On Your Next Project? Visit Our Contact Us Page and Submit A Request For A Free Estimate Today!
You Can Also Call Or Text Our Office To Speak A Member Of Our Team At: 978-660-2121.
