The American dream of home ownership is alive and well in Oklahoma. Industry experts say the perception of a buyer’s market is giving way to the reality of a better balanced market where some sellers are able to profit.
Oklahoma Association of Realtors President Mary Terry says Oklahoma’s real estate market is strong and steady, with the first quarter of this year seeing a distinct upturn.
“Inventory is down slightly, which makes it more of a seller’s market, contrasted to the buyer’s market we had been seeing due to foreclosures and short sales,” says Terry. “If you are thinking of selling your home, now is the time. Average days on the market for an Oklahoma home is slightly down, meaning it is taking less time to sell. Our average sale price is up by about six percent across the state from last year around this time.”
Debbie Barbe, marketing director and vice president for Arvest Bank, agrees that some Oklahoma markets, once more, favor sellers.
“We are starting to see the pendulum swing the other way, and, in some markets, we now have a seller’s market,” says Barbe. “Typically, a more normalized market has six months or less of available inventory. For example, in the Tulsa Metropolitan Statistical Area (MSA) we are experiencing an increase in closed transactions, and the listed inventory continues to dwindle, which bodes well for many sellers. This is creating more demand for fewer properties, so the sellers have an advantage. However, in the lower price ranges and in some other Oklahoma communities, the numbers are lagging behind but still trending in a positive fashion.”
While home prices are on the rise in some areas, there is an old saying that applies: “Real estate is local in nature.” It is not accurate to generalize or lump the entire state together. Terry says she has seen the average sales price for the metropolitan areas in Oklahoma running from $155,000 to $167,000 and, for more rural areas, from $108,000 to $125,000.
“The trend of home prices can vary greatly by state, city and even neighborhood,” says Barbe. “In general, we are seeing a slight increase in home values across the area.”
However, Barbe adds, in February 2014, real estate research company RE Stats released a report showing the average home sales price fell 5.9 percent to $149,666 in the Tulsa MSA.
Barbe attributes the recent price drops to several factors, including a higher quantity of lower-priced homes selling more than higher-priced homes and the fact that, historically, fewer sell during the winter months.
In real estate, it’s all about location, and Barbe says it is no secret that obtaining a mortgage in a rural community can be much different than obtaining a mortgage in an urban area. She advises customers to work with a local or regional lender who understands lending in a rural area. For rural buyers, the U.S. Department of Agriculture Rural Development Loan, which requires no down payment, is a viable mortgage option.
“From an underwriting standpoint, the largest difference between urban and rural lending has to do with the collateral valuation,” says Barbe. “Due to the density in urban areas, it is generally easier for an appraiser to find ‘comparable’ properties to use in determining property value. However, when lending in a rural area, the appraiser may have to expand their search to find a comparable property.”
Fannie Mae, Barbe adds, recently provided some clarification and guidance on mortgage lending in small towns and rural communities stating the appraiser’s responsibilities to examine, analyze and explain market conditions and conclusions of appraisals.
Whether it’s a city home, a place in the suburbs or a country homestead, mortgage viability in the state is upbeat, according to both Barbe and Terry.
“Buyers benefit from continued low interest rates and favorable tax incentives like the mortgage interest deduction, making housing that much more affordable,” says Terry. “In a nutshell, Oklahoma’s home sales market is strong, and we expect it to continue to grow as the economy grows. We are fortunate to live in Oklahoma.”