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Housing market: ‘You have to look at this at a local level,’ expert says

DLB Financial Services CEO Debbie Boyd joins Yahoo Finance Live to discuss the housing market in Texas, the outlook for a recession, rising mortgage rates, and more.

Video transcript

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- More evidence of a cooling housing market today, with existing sales pulling back nearly 6% in July. Debbie Boyd is the CEO of DLB Financial Services. She joins us now with more on the sector and where we're headed. Debbie, nice to see you.

So it was Lawrence Yun of the National Association of Realtors who provided that data and says, we are, quote, "surely in a housing recession." Do you agree with that assessment, and how significant is it?

DEBBIE BOYD: Well, thanks so much for having me. You know, real estate is always, always local. And when you look at the local markets, yes, if people are leaving your city, moving to some other city, then you're going to think you're in a recession. I'm in Texas. Texas is booming right now. So we're not in a recession. I think you have to look at this on a local level.

Also, just because the numbers are down, that's kind of misrepresentative. They're down because people are in leases because they couldn't buy a few months ago. So they're still out there looking to buy a house. They just can't actively do a mortgage application and go looking for houses unless they want to buy out of their lease. But they're still looking.

- Debbie, I can't help but wonder, is there a danger in saying this is a housing recession when, to your point, historically, when you look back over the last three, four, five years, home prices are still at an astronomically high level.

DEBBIE BOYD: Well what I try to tell families is, it's really all in your family. So if you have to move, you're going to move. If your company is relocating and you're going to the office, then you're going to move. If you want to be near Grandma or whatever, you're going to move. Then you're going to buy a house. It's always better to buy than rent.

So there's still going to be a lot of movement around. It is going to scare people into thinking that there's not a lot of home choices out there. That's why they've always got to work with a professional agent and a mortgage broker so that we can show them what's available. There is going to be a lot more home choices now than there was just a few months ago because everybody thinks that everybody's done looking, but they're not.

- But Debbie, when you take a look at the numbers, supply of homes do remain tight. I know that might not be specifically the case where you are in Texas. But when you look across the country, that is the case. And even the numbers out this week, residential permits, which is a bellwether to home construction, that fell about 1.3% in July.

So do we see this-- on a nationwide landscape, do we see this potentially not improving now for quite some time?

DEBBIE BOYD: Well, you know, I think the builders are kind of nervous of, like, are they going to start building homes and then no one's going to come buy them? Are they going to start building homes and then get them under contract? It really depends on what the people in your area are saying. A lot of homes are back on the market because they fell out of-- that people couldn't afford to buy them if they were paying $50,000, $60,000 above asking price. The rates are higher. If they didn't get qualified, right, then they can't qualify now.

So we're seeing a lot of movement in this space. People are still wanting houses, builders are still wanting to build houses, but there's a shortage of land, I think, everywhere, where the roads are already done. So if you're starting a new build it's going to take a little while longer. But these new builds are coming back on the market.

Now home builders-- the big national home builder companies-- are actually reaching out to real estate agents saying, we're giving you a big advantage. We're giving you an extra $5,000. Please come sell our homes. Just a few months ago they didn't have any homes to sell. It's always a timing issue when it comes to real estate.

- Speaking of timing, homes are flying off the market. 14 days on average in July, matching the highest-- the fastest pace we've ever had from a month prior. So there's a lot of conflicting signs in here. And speaking of, mortgage rates fell from 5.22% to 5.13% at the moment. Mortgage applications at their lowest level since 2000. So if you're on the sidelines as a buyer, do you sit there and wait for prices to fall or are you overcome by the fear that mortgage rates are going to go back up as the Fed raises rates?

DEBBIE BOYD: You know, I think the smart people are getting the advice that you've got to buy now. You can always refinance if the rates drop. You know, eight years ago we never thought we'd see rates in the twos. Oh my gosh. I would have bet my life that would never have happened. So now that it happened, everybody expects it to happen again. I think that was just a fluke. These are where the prices are normally, fours and fives and sixes. Yes, if inflation gets really bad they're going to go up again and then people are going to stop buying.

But if you need to buy a house, you need a bigger house, you need to move across the country, you need to sell your house, it's all family-specific. So people bought houses when the rates were 18% and they bought them when they were 2%. The thing is that people are not going to sell their homes now if they're in a 2% or 3% rate just because. It's going to be a very enticing reason to double their interest rate to move. So it has to be for a really good reason.

- Debbie, how much power does the buyer have in the home selling process? Because we talked about during the pandemic, the buyer basically couldn't ask for anything. And that wasn't too long ago. So how much power does the buyer have today?

DEBBIE BOYD: A whole lot more, like double, triple. Like back the way it used to be. Now they're asking for the title policy to be paid, the survey to be paid, now they're asking for concessions and help on closing costs. If you don't have 25 offers bombarding you, paying $50,000 above, you've got to be nice to the two or three people that are making you offers if you want to sell your house.

So we're seeing a lot of seller concessions right now, which is just the way you're going to have to sell your house in this market. Markets change fast. It could go back the other way, but I don't think so.

- We've talked about all the dire data that continues to pour in day after day, but what one region of the country is really bucking those national trends?

DEBBIE BOYD: I think the south, and you're talking Arizona, Florida, Texas, where a lot of the companies are moving. So now everyone wants to work remotely from home. Great, but there are companies that are moving employees still across the country. Those people are still going to be moving. They're going to states that do not have a state income tax. It's better for the businesses and better for the employees. So we do see a lot of movement coming to the south.

- All right. Debbie Boyd, thanks so much for joining us here this afternoon.