Land rush: Sellers market creates real estate boom
Properties for sale in Southern Oklahoma are in limited supply, and those that go on the market are being snapped up soon after listing.
Marcus Cunningham, managing broker at United Country Southern Oklahoma Realty, said the current market is one of the busiest and most competitive he has experienced in his career.
A combination of low interest rates and an influx of buyers from out of state have led to what is sometimes known as a sellers market because there are more people looking to purchase land and homes currently than there are properties available for sale.
“Our biggest issues is getting more listings to supply enough properties for the current number of buyers,” Cunningham said. “If I could list 10 properties today, I could probably sell them by tomorrow. It really doesn’t even matter what kind of property it is. As long as it is priced in the ballpark of market value, it will sell quickly.”
He said the limited supply has even led to bidding wars between buyers and some homes selling for above listing price.
“Buyers are getting more aggressive and competitive, and buyer competition is extraordinary” Cunningham said. “Buyers are getting multiple offers, so some properties are selling at above list prices. So the list price to sale price is higher than its ever been based on the market.”
Cunningham said the trend began early last summer, and he supplied some figures from the Southern Oklahoma Board of Realtors to put things into perspective.
During the last six months of 2019, a total of 1,029 transactions took place in the area with an average selling cost of $163,000 worth a combined total of $168 million. During the same period in 2020 there were approximately 1,160 transactions with an average selling price of $174,000 worth a combined $202 million. Cunningham said the totals from 2020 are actually even higher than these figures, but a change in the system used to calculate the numbers has made the exact figures unavailable.
He said the primary reason for such a hot market is the drop in interest rates.
“I spoke with Tim Barrett of Barrett Mortgage today, and he said a 30-year fixed is around 2.75% or 2.5% for a 30-year FHA,” Cunningham said Wednesday. “He pulled up some similar transactions from last year, and all things being equal — similar credit scores and properties at the same amount — it was around 3.75% for a 30-year fixed and a 3.65% for a FHA.”
While this might not seem like a dramatic change, a lower interest rate of 1% or 2% becomes substantial when spread out over 30 years.
“For example, last year if you had a $1,000 a month housing budget including payments, insurance and property taxes, you could have bought a $143,000 house,” Cunningham said. “This year you could buy a $155,000 house with the same $1,000 budget. That may not seem like a lot, but think of how much more buying power that gives people and how much more sellers are getting.”
Another major factor in the limited number of properties comes from an influx of out of state buyers. Some of these buyers are looking for investments such as rental properties or land to grow marijuana, others — particularly retirees from North Texas — are looking to move into the area.
Cunningham said in both cases, buyers are are attracted to Southern Oklahoma’s low property taxes and lower prices than they would find in their home states.
“The investors from California and North Texas are consolidating in Oklahoma mainly because of the consistency of the market,” he said. “There’s a huge market for rentals that’s very consistent and very safe when compared to the big fluctuations you have seen in other areas.”
Cunningham said he expects the trend to slow somewhat in the coming months as more properties come onto the market.
“Every year we have a time period between late October and January when people are not eager to change residences because of all the holidays,” he said. “So we have a big reduction in the amount of homes on the market and then a resurgence as we get further into January. If that’s the case this year, I think the prices will drop a bit as more houses become available.”