Well, it’s been awhile since I’ve gotten behind the keyboard to write a fresh blog. For anybody who thought the Coronavirus would negatively impact real estate, I can tell you the opposite it true! Our market in the Oklahoma City area is as hot as I’ve ever seen it! So why is Real Estate so hot at the same time our country is suffering from record high unemployment brought on by the virus?
People have re-evaluated their living situation.
The virus has made people evaluate their real estate situation. As people quarantined, many folks found they needed more space at home- maybe a dedicated office, or a family or playroom. Others found they needed less space. The coronavirus also made people re-evaluate their domestic situations. “I can’t live without someone!”- or even “I can’t live with that person!” Both situations will make you reflect on your living situation.
Who wants strangers in your home?
People are scared! There is a lot we are still learning about the coronavirus, but we do know it has to potential to be fatal for some people. And we are still learning how the virus is transmitted. This has led people to be weary of letting strangers into their home. If a family doesn’t “have to” sell their house, they are waiting on the sideline (…and missing the hottest seller’s market in years!). This along with my next item are causing an extreme shortage of inventory.
Builders are cautious…and so are builder’s lenders!
The last thing a builder wants is a vacant house that sits not sold. The last thing a banker wants is a builder who can’t close out a construction loan because the house is not sold. So, when the economic future is uncertain, lenders tighten up and builders get more conservative with speculative home starts. All of these leads to fewer new homes on the market.
Interest rates are low…INSANELY low!
One of the first things the Federal government did to “juice” the economy was to lower interest rate to all time lows. These rates are now reflected in mortgage interest rates. We are seeing well qualified buyers with 30-year mortgage rates well under 3%. These low rates are allowing buyers to get much more house for their mortgage payment.
Institutional Investors
A recent trend on Wall Street has been publicly traded REITs (Real Estate Investment Trusts). Many people consider these a safe investment, and money has poured into these companies. Add in the low interest rates and these companies have billions to invest in real estate. REITs are not only investing in office buildings and shopping malls, but they are buying single family rental homes by the tens of thousands- especially at the lower end of the market. This puts further pressure on this segment of the market, resulting in homes selling with multiple offers, and over asking price just hours after going on market.
So- combine these factors, and you have what is arguably the hottest real estate market that we have seen in perhaps decades. If you have been considering selling your home-you need to stop considering, and get it on the market! One thing I can promise you- nothing lasts forever! Real Estate is always moving from a seller’s market, to a buyer’s market, and back again. I’ve got a client who has decided to sell now, and what he thinks is a peak in the market, but his equity in the bank, travel the country in an RV for a year, then buy back into the market he is predicting will be much slower in a year. It’ll be interested to see how clear his crystal ball prediction is!
Buying or selling? Let our team guide you through the process. Call us today at 405-309-7477.