What is the current state of the housing market?
JP: Oklahoma City is the leading housing indicator for Oklahoma, with the lowest unemployment and the most population growth. It is also rated highly for new positions for skilled and educated labor.
This year is continuing the trend of higher closed and pending sales, lower days on market and a tighter inventory.
Why is the inventory so low?
JP: For a number of reasons. First, with interest rates still at historic lows, it encourages renters to get off the fence for home ownership. Secondly, it has also caused a flood of refinancing, which keeps people in their existing homes rather than putting them up for sale. Third, the new home construction has not kept pace with demand.
Are people buying or renting more now than in previous years?
JP: The answer is both. With the population growth and influx of out-of-state workers, demand is greater for home sales, especially in the luxury market, and those unfamiliar with Oklahoma are choosing to rent to evaluate a permanent move. We also have a younger generation coming out of college with high student loan debt that are either living at home or renting. We can expect this trend to continue.
When is the best time to buy a home?
JP: Our market is increasingly less seasonal. The rise or fall of interest rates, even by a fraction, can be the trigger for owner-occupants to get into the market, so January and February 2013 have been incredible. In Edmond alone, we saw a jump of around 60% in pending January sales over last year because of low rates.
When is the best time to sell a home?
JP: Excuse me for sounding like a salesman, but right now, with home inventory tight and low interest rates giving people more buying power, it is, in many areas, a seller’s market with the absorption rate well below six months, which is the time factor that is considered a neutral market.
What mortgage options are available to homeowners?
JP: The last five years have been a half decade of FHA and VA loans dominating the market because of the strict qualifying guidelines of conventional mortgages as well as the higher down payment requirement, but that is changing.
Now, conventional rates are as low as 3% for special programs, and since FHA has increased the mortgage insurance rate, conventional is more attractive. There are also continuing first-time home buyer special financing, American Indian home loans that are extremely attractive and rural-area loans for outside the city areas that feed in.
What is the future of the mortgage interest deduction?
JP: There is much talk about what happens in Washington if a “grand bargain” is struck between the parties and the mortgage deduction is in the mix.
We are lobbying hard for its continuance and feel positive that it will stay in place for primary mortgages. The tougher fight will be for second homes, but nationally, we are fighting hard for that.
Has the Internet changed the real estate industry?
JP: The Internet has revolutionized the real estate industry. Pre-web, the real estate agent was the hub of the wheel and a client was one of the spokes. Now, the Internet-empowered consumer is the hub, and the entry can be through websites, blogs, videos, social media or real estate portals like Realtor.com or Zillow.
The agent has lost some control, but the potential client now has immediate access to information so that by the time they come to a transaction, they are more educated and better able to make informed decisions. This openness has benefited everyone, and the real estate industry is now a true democracy.
Has the industry changed to meet this web-based real estate reality?
JP: Yes, and in so many ways. Before, we constantly pushed out listings and talked about our successes. Now we are pulling in the public with the benefit of a wealth of knowledge that is immediately accessible.
It has also resulted in greater accountability of all the facets of real estate, as the conversations about us are now so public in the social media. The result is a much more professional group of participants in any real estate transaction. The next change is in the vastness of the World Wide Web. How can diverse snippets of information be synthesized into a coherent message that addresses the breadth of the components of real estate? I am not sure how it will be done, but I know it will be, and I am excited to see it when it comes.
What’s in your crystal ball?
JP: Long-term trends can always be disrupted, but if the last two years of Oklahoma market statistics is any indication, we should expect positive housing trends through the next few years. We can’t expect interest rates to stay permanently low, but inflation is expected to be contained through 2016, which, even with some rise in interest rates, should not be enough for Oklahoma housing to visibly slow its upward momentum.
Finally, we are blessed with a stable, predictable market, and in the last 12 years, we have seen only slight variations in home values with about 5% maximum rises, but those folks in Florida who saw as much as 80% value drops in 2008 would take that in a heartbeat.