Real estate boom continues; inventory remains short

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OKLAHOMA CITY – Some places people are calling home today have changed in response to market challenges.

“We’re seeing a lot of changes in what people are buying and renting … because of the lack of inventory,” residential real estate investor Angelena Harris said during a recent JR/Now webinar.

Journal Record Editor Joe Dowd moderated the discussion with Harris, managing broker at Spearhead Realty, and Monty Strickland of Realty Experts.

Harris said August listings for single-family homes – which numbered almost 7,000 in 2020 – were down 47% this year to 3,298. Average days on market went from 37 to 17.

Strickland said the pandemic resulted in “one of the biggest real estate boom markets that we’ve ever had.”  While home sales normally drop off going into the holidays, the market has slowed down only slightly this year, he said.  Sellers continue to get multiple offers for houses, just not as many as during the summer.

The MLS (multiple listing service) database that encompasses the vast majority of Oklahoma currently has about 3,200 to 3,400 listings. That’s everything from a $6,000 property to an $8 million property, Strickland said.

“We’re seeing an increase in town house sales and condo sales that we haven’t seen in the past just because of the fact they can’t get single-family homes for an affordable price,” Harris said.

Supply chain issues also have affected housing inventory. Some builders have switched to smaller residences like tiny homes or urban infill projects, Harris said. “They can’t get the materials that they need to build – that’s the biggest problem – and so some of them are looking at alternative methods to building.”

Another factor is people cashing out on the East and West coasts and coming to Oklahoma, where they are paying cash for houses because the price per square foot is considerably lower, the experts said.

For $300,000 or $400,000 in Oklahoma City they can get a really nice house, much nicer than where they are moving from, Harris said.

“They’re coming from everywhere,” said Strickland, who in recent months has had clients from California, Florida, South Carolina, Austin and Chicago. “We’re seeing it a lot. … We’re still seeing a lot of activity over the asking price.”

For the past four months, sellers consistently have received 100% or more of the asking price, he said. Historically sellers get 95% to 98%.

“It’s a fantastic time to sell … because the median value has increased so much even since January of ’19,” Strickland said. “It has increased almost $50,000 in the Oklahoma City metro area.”

Harris said several agents in her office work with out-of-state investors and 1031 exchange buyers who are purchasing $200,000-plus homes “to rent them out and to park their money for a while … and Oklahoma is a safe place during inflation to do that.”

They are paying in cash and bidding 5% over asking price to make sure they get the house because they need to move their money quickly so they don’t have to pay taxes on it, she said.

The situation has made it difficult for local buyers to compete, especially first-time homebuyers, Strickland aid. “It’s just created different obstacles and different hurdles … that we’ve just never had to encounter before.”

Harris said the rental investor market is not slowing down. “We have a major inventory shortage on rental property throughout the United States and I can definitely see that in our local market. People cannot find places to live,” she said. Part of that is due to the shortage of rental houses.

Out-of-state syndications are coming in buying or building apartments because the interest rates are low, she said. Typically, they sell them in five to 10 years for a profit.