Summary: With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL<br> During this week’s real estate roundup, Steve spoke with <a href="http://www.terrystory.com/">Terry Story</a>, a 31-year veteran at Keller Williams, about the current state of home prices and mortgage interest rates. They spoke about the fact that despite the consistent rise in home prices, the current housing market situation is notably different from what was seen in the years prior to the housing market crisis of 2007-2008.<br> The Current Housing Market<br> In the six years prior to the housing market crisis, home prices climbed consistently and sharply. Starting in 2000, “Prices were up 8.6% for the year. The percentage continued to increase, compounding on itself. In 2004, home prices skyrocketed, up by 12.5%,” Steve noted.<br> Compare that with the past six years. Steve had the numbers handy: “In 2014, prices rose by a little over four percent, 2015 by five percent, then six percent—but then back down to five and then under five, 4.8, 4.7%.”<br> Prices are rising, but we’re seeing a decline in the rate of appreciation. They’re still going up, but not as fast as they were a few years ago. Terry said that according to the National Association of Realtors (NAR), the peak for housing prices nationwide was in 2017.<br> Keep in mind that your home appreciates in price the longer you own it. The current statistics show this and reveal why we don’t appear to be running headlong toward another market crisis. “Median home prices over a seven-year period show an average appreciation of 29%. Eight years? – 32%. Ten years? – 39%.”<br> Terry offered listeners some more detail as far as regional statistics. The western part of the country has the strongest market, showing an average 10-year home price appreciation rate of 43%. The South’s 10-year appreciation is about 39%; the Midwest, around 37%; and the Northeast limps into last place with a 10-year appreciation of only 34%. Steve pointed out the nearly 10% discrepancy between the West and the Northeast.<br> It’s Not Like 2006<br> The home mortgage market is quite different now than it was back in 2006. Steve explained that banks were just handing out mortgages to people who didn’t even come close to qualifying for the size of home loans they were getting. Terry added that many of those mortgages had ridiculously low introductory rates—as low as 1% or 2%—with huge balloon payments on down the road causing homeowners to default on those loans. That’s not the kind of mortgage market that we have now.<br> Steve reminded listeners about negative amortization, one of the crazier aspects of mortgage lending in the early 2000s. He recalled, “You had the ‘pick a payment’ mortgages. Somebody would get a mortgage loan where the payments were about $1,200 a month, but if they felt like that was just too much, they could choose to just make payments of, say, $300 a month. Of course, that other $900 a month didn’t just disappear, it got added onto the back end of the loan. So, voila’! – you ended up with negative amortization.”<br> Positive News Amidst Coronavirus Concerns<br> News about the novel coronavirus is everywhere, and unfortunately, the numbers coming in are terrifying. But there is some good news for homebuyers—the effect on interest rates. The stock market has been chaotic, to say the least. Institutions are pulling out of the market, selling shares in massive amounts.<br> Steve explained, “…that money has to go somewhere. And it’s going into bonds. This drives the price of bonds up. When prices go up, yields come down and loans tied to bonds decrease in interest. That means mortgage interest rates are coming down.” While it’s true that interest rates have been low for a while, the market is moving even more favorably right now.<br> Terry summed it up as “Interest rates are crazy low. It’s a great opportunity for homebuyers,
