Just friendly talking here."You are" used a in dialogue when it should be "You're". For example, when a person is talking to someone else "You are welcome" would not be used. It would be "You're welcome".
Both examples in your statement are proper grammAr. "You're" is simply a contraction of "you are." They are both equal from a grammatical point of view. The real difference is perception because Billy might have grown up hearing and saying it one way while Sally may have grown up hearing and saying it the other way, and both of them think their way is correct. Sure, "you are" is more formal and is more likely to be considered proper grammar, but at the end of the day they are the same thing.
can't=cannot
don't=do not
won't=will not (I still have no clue why it's not an "i")
aren't=are not
shouldn't=should not
y'all=you all (for the southern folk)
etc.
Here's a fun one for you though:
You're there with your friends watching them pare their pair of pears while they're dreaming of days of yore.
Just sayin'
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