Real estate market ‘booms’ with low interest rates, lack of inventory | Business
ENID, okla. – In nearly 30 years in the real estate business, Tom Andrew has never seen a real estate market like this one.
Low interest rates, fewer homes in the market, and homes selling fast have all led to an unusual time in business, said Andrew, the agent and owner of Andrew Real Estate.
“We’ve had times when the interest rate got low, but we’ve never had such an interest rate,” he said. “When it came down to 200 houses (in the market) it was like, ‘Wow, I can’t believe there are only 200 houses,’ but having fewer than 100 now is really just unprecedented and if something is on sale if they are not long for sale. “
“If the price is right, it’s gone.”
When he started working in 1992, Andrew stated there were around 500 properties for sale, but inventories have slowly declined since then, falling below 100 in the past six months.
There are currently 89 homes in Enid at an average price of $ 203,000, Andrew said – 15 of them at Andrew Real Estate – and there are more than 200 homes outstanding, said Jeff Schaffer, sales director at Coldwell Banker Realty III.
Past president of the Oklahoma Association of Realtors, Amy Bladow, in an article by Shawnee News star last year, there was a surge in buyers but not enough deals.
This leads to a different kind of struggle in real estate, added Andrew.
“It’s strange that there used to be someone who bought the house, but there are people who want to buy houses. You can’t sell a house that can’t be sold,” he said. “Now the problem is you have people who want to buy but can’t find the house they want, and if a new one comes on the market and you don’t react quickly, you’re just out of luck. ”
Lisa Powell, executive director of the Enid Regional Development Alliance, said this shortage is limiting the number of people who can move to the city and accept available jobs, which affects economic development.
Powell said she saw a similar case in 2012 of a shortage of real estate stocks with a growing economy – she said people commuted long distances or even camped in tents because there wasn’t enough housing.
“At this point, we were doing our first home study to try to prove to developers and banks the market for housing finance … that Enid has grown sustainably and that additional housing is needed,” said Powell. “At the time, this was proving very successful and helped initiate some new housing starts in Enid.”
The spring and summer months are usually busy times for real estate, but with the COVID-19 pandemic, sellers have been reluctant to list homes.
Schaffer said his office wasn’t sure how to react because the pandemic was so unprecedented.
“The business has changed enormously,” said Schaffer. “Although we were deemed essential by the governor and continued to operate, we just had to change things to adapt to the situation.”
After reopening last May, things have improved for Andrew Real Estate and been busy year round, Andrew said, as have Blevins Real Estate and Co. and Coldwell Banker Realty III.
The average days a home was on the market between May 2020 and May 10 – averaging $ 165,000 – was 52 days, Andrew said.
As of April 2020, 44 homes closed with an average price of $ 146,000 and an average market duration of 67 days. 57 houses were closed in April 2021, an increase of 29.5%.
Angie Blevins, broker and owner of Blevins Real Estate and Co., said that when a home is “the right price, it’s gone,” and not only that, but it has several offers.
Schaffer said the high interest rates and additional COVID-19 aid money put many people in the mood to buy and often offer more than one home that has been listed based on multiple offers.
Both residential and commercial real estate have an impact on economic development, Powell says, and ERDA works most with commercial real estate.
“Whether you’re working with a company looking to expand or working with someone new to town, the first thing they always need is a location – a place to open up or in that he can grow into, ”Powell said.
ERDA employees work closely with commercial realtors in the city such as Andrew Real Estate as ERDA is often the first port of call for a new business in Enid.
Powell said ERDA will link these companies with commercial brokers in the city.
At the moment it is also more expensive to build houses. Andrew said that the price of a two-by-four is three times what it was before Christmas today, and that it’s likely the same with copper wires, carpet, and everything else.
The mills were closed and not producing when COVID-19 hit, Blevins said, but their agency was still building houses so there was a “shortage of everything”.
“Additionally, for the past few months, you’ve been seeing everything else around you,” she said. “Steel is on the up, so all of your metal buildings or garage doors have seen three price increases since January 1st. HVAC, this is your heat and air units, all up 6% from May 1st When I get a quote from a metal construction company, it might only be valid for a week. We can’t even get Timber Storage to quote us anything as each line item is only allocated. So the price is unknown until it is sent to us. “
“You’re going to get a lot more than you ever thought.”
Andrew believes the recent “boom” he’s seen in home buying has been due to “incredibly low” interest rates.
On May 14, Oklahoma mortgage rates on a 30-year fixed rate mortgage were 3.125%, with the US bank’s annual percentage being 3.193%.
“It’s like free money,” said Andrew. “Your payments are so much lower because your interest rates are so much lower than they used to be.”
On site, it’s a little over 3%, said Angie Blevins, broker and owner of Blevins Real Estate and Co.
Blevins, Andrew and Schaffer summed up the current state of real estate as “crazy”.
“That’s the best way to describe it,” said Blevins. “It’s crazy … schedules are crazy. Lead times are insane. It’s all crazy. We are making history right now. “
In 2019, interest rates were up to 3% or 3.5%, according to the Oklahoma Real Estate Commission. Blevins said interest rates are tied to inflation, and as inflation rises, so are interest rates.
Right now, Andrew said it was a “great time” selling houses and buying new ones when people find houses they want.
“Given that interest rates are so incredibly low, you’re getting far more than you ever thought,” he said, “but at the same time it’s a great time to sell because there are people who really buy want.”
Andrew recommends that local buyers stay in their new home for at least three years.
“The national adage is that you don’t look at a national weather report to get an umbrella to work. You look at a local weather report and real estate is the same,” Andrew said. “Our market is historically in the really long history that we have a very slow and steady appreciation of real estate, which is good.”
Schaffer said he hopes that things will stay strong in real estate and “go back to normal” with adequate inventory levels and that interest rates will stay close to what they are now.
“Hopefully things will stay as strong as before,” said Schaffer. “I would like to see (real estate) return to normal day-to-day activities … If the Fed cooperates, the economy will pick up. It has to stay low for a while for the economy to pick up again after what happened last year. I’d love to see where people were not comfortable putting their house on the market and we’re starting to loosen up. “