June 16, 2021

Terrades Delmoli

Experienced In Home Improvment

Real estate market ‘booms’ with low interest rates, lack of inventory | Business

6 min read

ENID, Okla. — In his nearly 30 years in the real estate business, Tom Andrew has never seen a housing market like the current one.

Low interest rates, fewer homes on the market and houses selling quickly have made for an unusual time in the business, said Andrew, the broker and owner of Andrew Real Estate.

“We’ve had times when the rate has gotten low, but we’ve never had an interest rate like this,” he said. “When it got down to 200 houses (on the market), it was like, ‘Wow, I can’t believe there’s only 200 houses,’ but now to have less than 100 is really just unprecedented, and when something is for sale, they don’t stay for sale for very long, either.”

‘If it’s priced right, it’s gone’

When he started working in 1992, Andrew said there were around 500 properties for sale, but since then, inventory has been slowly dropping, dipping below 100 in the past six months.

Now, there are 89 houses on the market in Enid with an average price of $203,000, Andrew said — 15 of them with Andrew Real Estate — and there are more than 200 homes pending, said Jeff Schaffer, sales manager at Coldwell Banker Realty III.

Real estate in Oklahoma saw a surge in buyers but not enough listings last year, according to Amy Bladow, former president of the Oklahoma Association of Realtors, in a Shawnee News-Star article.

This makes for a different type of struggle in real estate, Andrew added.

“It’s weird that it used to be finding someone to buy the house, but you’ve got people wanting to buy houses, you can’t sell a house that won’t sell,” he said. “Now the problem is that you have people wanting to buy, but they can’t find the house that they want to, 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 Enid Regional Development Alliance, said this shortage limits the number of people who can move into town and take available jobs, impacting economic development.

Powell said she saw a similar instance in 2012, where there was a lack of inventory in real estate with a growing economy — she said people were commuting long distances or even camping in tents because there wasn’t enough housing.

“That’s when we did our first housing study to try and prove the market to housing developers and banks to finance housing projects … that there was a sustainable growth in Enid and the need for additional housing,” Powell said. “At that time, that proved to be 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 were hesitant to list homes.

Schaffer said his office was unsure how to react because the pandemic was so unprecedented.

“Business changed tremendously,” Schaffer said. “Even though we were deemed essential by the governor and continued to operate, we just had to change things to adapt to the situation.”

After opening back up last May, though, things picked up for Andrew Real Estate and stayed busy throughout the year, Andrew said, as did Blevins Real Estate and Co. and Coldwell Banker Realty III.

The average days a house was on the market between May 2020 and May 10 — with an average price of $165,000 — was 52 days, Andrew said.

In April 2020, 44 houses closed with an average price of $146,000 and an average of 67 days on the market. In April 2021, 57 houses closed, a 29.5% increase.

Angie Blevins, broker and owner of Blevins Real Estate and Co., said if a home is “priced right, it’s gone,” and not only that, but it has multiple offers.

Schaffer said the great interest rates and additional COVID-19 relief funds put a lot of people in a buying mood, often offering more than a house was listed for due to multiple offers.

Powell said both residential and commercial real estate impact economic development, and ERDA works most with commercial.

“Whether you’re working with a business that’s trying to expand or whether you’re working with someone who’s new to town, the first thing they always need is a location — a place to open up or a place to grow into,” Powell said.

The ERDA staff works closely with commercial realtors in town such as Andrew Real Estate, since ERDA is often the first point of contact for a new business in Enid.

Powell said ERDA will connect those businesses with commercial realtors in town.

Right now, it’s more expensive to build homes, too. Andrew said the price of a two-by-four costs three times more today than it did before Christmas, and that it’s likely the same with copper wiring, carpet and anything else.

Mills shut down and weren’t producing when COVID-19 hit, Blevins said, but her agency was still building homes, so there was a “shortage of everything.”

“On top of that, what you’re seeing now in the last few months is everything else is going up around you,” she said. “You have steel going up, so any of your metal buildings or your garage doors, they’ve had three price increases since Jan. 1. HVAC, which is your heat and air units, all of those went up 6% starting May 1. If I get a quote from a metal building company, it may only be good for a week. We can’t even get lumber yards to quote us anything because each line item is just on allocation, so the price is unknown until it’s sent out to us.”

‘You’re going to get way more than you ever thought you would’

Andrew thinks the recent “boom” he’s seen in people buying houses is due to the “incredibly low” interest rates.

As of May 14, mortgage rates in Oklahoma for a 30-year fixed mortgage were at 3.125%, with the annual percentage rate standing at 3.193%, according to U.S. Bank.

“It’s like free money,” Andrew said. “Your payments are so much less because your interest rates are so much less than what they used to be.”

Locally, it’s just over 3%, said Angie Blevins, broker and owner of Blevins Real Estate and Co.

Blevins, Andrew and Schaffer all summarized the current state of real estate as “crazy.”

“That’s the best way to describe it,” Blevins said. “It’s insane … timelines are crazy. Lead times are crazy. It’s all crazy. We’re 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 goes up, so do interest rates.

Right now, Andrew said it’s a “great time” to be selling homes and buying new ones if people find homes they want.

“Considering interest rates are just so incredibly low, you’re gonna get way more than you ever thought you would,” he said, “but at the same time, it’s a great time to sell because there’s people really wanting to buy.”

Andrew recommends that local buyers plan on staying in their new homes for at least three years.

“The national saying is that you don’t look at a national weather report whether to bring an umbrella to work today — you look at a local weather report, and real estate is the same way,” Andrew said. “Our market, historically, over the really long history of it, is that we have a very slow and steady appreciation in real estate, which is good.”

Schaffer said he hopes things stay strong in real estate and go back to “normal” with adequate inventory and that interest rates remain close to what they are now.

“Hopefully things stay as strong as they’ve been,” Schaffer said. “I would like to see (real estate) go back to normal, day-to-day activity … If the Fed will cooperate, we’ll get the economy cracking. It needs to stay low for a while to keep the economy cracking and rebuilding after what happened last year. I would like to see it to where people weren’t comfortable putting their house on the market and we start loosening up.”