Housing Market Madness
Just when you thought bidding wars and lightning-fast pending offers popped out of existence with liar loans, they’re back. It’s definitely the right time to sell; it also might be the last chance to snatch up a good deal for a while.
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Real estate agent Jamie Black doesn’t waste time when she’s got a home to sell. This summer, for example, she inked marketing rights on a 4,400-square-foot, half-million-dollar luxury home in Mustang’s gated Magnolia Trace neighborhood.
That afternoon she snapped a photo of the exterior. She scheduled her photographer to come the next day for interior shots. She had the home up on the Multiple Listing Service before midnight.
The house sold the next day. Not surprisingly, Black’s reaction is: “I would love to have a bunch of those.”
Not every one of her listings sells in less than 24 hours, but Black and her counterparts across central Oklahoma are relishing a real estate boom not seen here since before the Great Recession. It’s a seller’s market and buyers better be hopping.
“They’re going fast and even if it’s only been on the market one or three days, you’ve got to get out there immediately or you’re going to miss it,” Black says.
Real estate professionals describe the metro market with adjectives worthy of the most gushing of real estate ads: “wonderful,” “fantastic,” “crazy.” Black’s colleague Keith Taggart, managing broker of Coldwell Banker Select in Mustang, says his office’s record-setting sales are up more than 20 percent over last year, which were already up more than 20 percent over the year before that.
“Now we have so many more buyers than we do houses for sale that it’s not uncommon that a property will have multiple offers on it. And the sales price will be above the list price if they get into price wars over them,” Taggart said.
Central Oklahoma’s housing market has been in recovery for about two years – and is hotter than ever. Taggart, also president of the Oklahoma City Metro Association of Realtors, attributes that to years of pent-up demand still left over from the Great Recession. Buyers with doubts about an economic reawakening are no longer holding back.
“We’re as busy now as we were at the height of things seven or eight years ago,” Taggart said. “As soon as people started feeling better about their jobs and better about the economy, they came out in droves.”
A red-hot metro economy is driving the clamor. Central Oklahoma was the nation’s No. 1 job market for 13 months in a row until it slipped to No. 2 last summer. OKC Mayor Mick Cornett notes in speeches across the country that an average of 2,000 people move into the metro every month.
The flood of home seekers, though, is starting to back up against a wall in the form of fewer places to call home. The number of metro residences for sale typically wavers between 9,000 and 11,000 at any given time. Last summer it dropped to the mid-7,000s.
The real estate industry employs a calculation called “absorption rate” to gauge whether a market tips in favor of buyers or sellers. It answers this question: If no more homes are listed for sale, and the demand for new digs stays as it is, how long would it take for all the existing listings to be sold?
“Anything less than five months is considered a seller’s market,” Taggart said. “We’re down to four months.”
The metro is contending with another blow to inventory that no other market faces – the devastating May tornadoes. The summer’s inventory figures in the 7,000s didn’t include more than 1,300 homes destroyed by the storms.
High demand with low availability is a boon for home sellers, though. They’re getting asking price 98 percent of the time, according to the Metro Association of Realtors. And they’re getting their money fast: On median, homes spend about 35 days on the market before they sell. The median metro home price of around $150,000 is the highest ever and a nearly 4 percent increase over last year.
Oklahoma Association of Realtors president
Those pressures are driving up prices across central Oklahoma, including Norman, Yukon and Mustang. Edmond’s home sales were at a record pace last year. They’re now running over 15 percent higher than that, said Joe Pryor, president of the Oklahoma Association of Realtors.
“What we have right now is an incredibly vibrant market throughout the metro,” Pryor said. “And if it’s not selling, it’s being rehabbed, totally upgraded and added to.”
The market’s effervescence isn’t skipping the metro’s newest housing options – the condos, townhomes, lofts and apartments of Bricktown, Midtown, Deep Deuce, etc., in the OKC core. Oklahoma City Thunder forward Kevin Durant recently slam-dunked unbeatable geographic hipness into The Hill townhomes when he bought two adjoining residences for $1.7 million. But the area’s recovery began well before that. Pending construction is projected to bring around 1,000 more living spaces there in the next few years.
“The thing we’re seeing right now in our population growth is that we have young people that are staying. The job market’s good,” Pryor said. “They’re always going to be the first ones to go downtown. They want the nightlife. They want the excitement. They want the sense of community that maybe Bricktown offers them.”
Homebuilders and developers are scrambling in the same high-speed gear as real estate agents, trying to meet the high demand. The Central Oklahoma Homebuilders Association recently logged the highest number of home starts since 2007.
The seller’s market trend isn’t likely to end soon, but prospects for home hopefuls are still good, Taggart says. Mortgage interest rates have climbed, but are still historically low at under 5 percent. The metro is still a place to get a lot of home for the buck, compared to larger markets.
Unlike markets that melted down with massive numbers of foreclosures and fire-sale prices during the recession, central Oklahoma largely avoided that level of drain to personal housing wealth. It’s still a good time to buy, local experts say. In fact, it could be the most opportune chance for a long while if steady low inventory and brisk demand continue to squeeze buyers into next spring.
If you’re looking to buy, competition historically lets up from September through February, even with thousands of homes still up for sale. With the metro’s market numbers, few think the ascendancy of sellers will topple anytime soon.
“If we know we have a market that didn’t melt down, that had the lowest amount of underwater mortgages and has had a steady rise, I think that’s the confidence that you have,” Pryor said. “Even if there’s a 3 percent or 4 percent increase in value in the next two years, guess what? You’ve just paid for the cost to sell in two years. In some markets, that’s not possible. In Oklahoma City, it is.”
Oklahoma Association of Realtors president
It is What it is
Surviving and Thriving in a Seller’s Market
Who better to give you a competitive edge in a sizzling housing market than the heads of the top two real estate groups in central Oklahoma?
Keith Taggart is president of the OKC Metro Association of Realtors. He’s also an attorney and managing broker of Coldwell Banker Select in Mustang. He was tapped three times to oversee the data-rich Multiple Listing Service for the OKC metro.
Joe Pryor is president of the Oklahoma Association of Realtors, headquartered in north OKC. He’s watched the metro real estate market evolve for 24 years as a professional.
Advice for Buyers
► Get fast, Taggart says. Prepare to spend evenings in your car chasing new listings. Sign up for the latest email alerts on the latest entries to the market. Comb through real estate sites daily to find emerging prospects. “If your agent sets you up and you stay on top of it like that, that’s the earliest chance you’ll get to see them.”
►Use backup offers. Even if a seller’s agent doesn’t call back, giving her or him a fallback option if a pending sale falls through can put you first in line to snap up a doozy. “Multiple offers and backup offers are things we haven’t seen in years,” Taggart said.
►This is not the time for low-balling. “That’s a mistake for buyers now. It is a seller’s market again,” Taggart said. Ninety-eight percent of sellers are getting their asking price. The most successful buyers today meet or exceed the asking price. The flea market prices following the recession are over, Pryor says. “You’re not competing against any distressed properties. You’re competing against your neighbor.”
►Even in a hot market, values are relative. Yukon and Mustang are booming, but home and land values are lower there than the fancier and more limited supply of houses in Edmond. “The lots in Mustang usually run about $20,000 to $25,000 apiece,” Taggart said. “In Edmond, you’re looking anywhere from $50,000 to $80,000. That’s a big difference.”
►Bargain-hunt on the periphery. Gentrification is here to stay. Homes just on the edge of established neighborhoods are riskier investments, but attractive to buyers with relatively less to lose. “If I can get a place for $40 a square foot and put $30 a square foot into it, I can make it my palace,” Pryor said. “The risk is greater, but with what I’m seeing right now in the Oklahoma economy, that risk is shrinking.”
Advice for Sellers
►Don’t push up prices – they’re already good. Pryor says it’s OK to list a home in great shape near the top of the pricing scale, but asking for 20 percent over market is a mistake. “We still have appraisals on the other end of the deal, and it still has to be based on comparable sales.”
►The fall and winter lull may not happen. Homebuyers generally try to relocate in the late spring and summer months before school begins, but central Oklahoma’s conditions may keep ripe options on the vine for a while. Interest rates are still low and not likely to skyrocket, Pryor says. “I wouldn’t hesitate to tell someone to put their home on the market in September.”
►If it’s a great offer, don’t blow it. It’s tempting in a seller’s market with multiple bidders to wait for more lucrative proposals. But if you’re getting a price that you wanted from the beginning, it’s better to take it, Pryor said.
►Go for it. Simon Shingleton, an agent who handles million-dollar-plus homes for Keller Williams Realty Elite, offers a few tips for modern marketing: Consider a dedicated website for your listing, full-motion video with touches like burning fireplaces to spur buyers’ imaginations and release all your marketing tools – from yard signs to mailings aimed at qualified buyers – all at once. “When you prime it so that everyone has a fair shot to get in on day one, you can really kind of create a little bit of a buzz and the urgency that we need to get in,” he said.
Financing the Dream
Fear not. The hype that post-recession, stringent mortgage loan rules will stymie you from buying your dream home is greatly overstated. So says Jason Stier, mortgage sales manager for First Fidelity Bank.
“If things are presented properly and expectations are managed in the beginning, getting loans done in 30 days or less is not an issue,” he says. “Even on the quirky ones, if all those quirks are addressed up front and expectations are managed, you should have no issues getting those loans through in a timely manner.”
One highly recognizable benefit of the Great Recession reforms is that home loan seekers are seeing fewer offers of “no money down” or “no credit history needed.” Interest-only and low-doc/no-doc loans no longer flood the market.
“Those things, to a degree, are pretty much gone,” Stier said. They’ve been replaced by vanilla loan options with stable track records of success.
Beyond conventional, government-backed loans from private lenders, metro cities and counties offer programs to help citizens become homeowners. Norman, Oklahoma City, Edmond and others offer down-payment assistance backed by federal lending programs. For anyone looking to buy, especially in a hot market, pre-qualifying for a loan is step one, Stier says. About 30 percent of prospective buyers don’t bother with it – to their great disadvantage, he adds.
For homeowners with average means, renovation loans usually involve refinancing their home’s mortgage to factor in the residence’s value after improvements. If you’re “buying ugly” with plans to renovate, the FHA offers a 203(k) rehabilitation loan that lets qualified buyers purchase a residence in need of repairs and include the renovation costs in a single mortgage. The housing agency also promotes an Energy Efficient Mortgage (EEM) program for financing high-efficiency upgrades as part of refurbishing.
Another option is a Home Equity Line of Credit (HELOC), which avoids closing costs and other expenses involved with refinancing. Then there are home equity loans, refinancing with cash out and more. Contact banks, credit unions and brokers for more along those lines.
Stand in the Place Where You Live
In a seller’s market with limited options, homeowners are transforming the all-too-familiar into fabulous. And if you love where you’re living, maybe all you need to do is rev up
the neighborhood vibe.
Michael and Mary Matlock have a lot invested in their neighborhood, Kickingbird Estates. They dipped their hearts in first.
Michael was 15 years old and Mary one year younger when they shared their first kiss on Nighthawk Court, near the creek. She lived in the neighborhood. Michael had traveled all the way from his parents’ home in south OKC to Edmond. That night, Mary was smitten. “Tonight we had our first kiss. Someday, I am going to marry that boy,” she wrote in her diary.
Their long-distance infatuation ended that fall, but they kept in touch from time to time. Seven years later, they started dating again. In the spring of 2003, Michael proposed – right there on Nighthawk Court.
In 2007, Olivia Ji-Anna Matlock met her parents for the first time. With Mary’s memories of Kickingbird as a pretty great place to grow up, the Matlock family next chose their first home: a single-story ranch-style in Kickingbird Estates.
More things had changed, though, than their budget for diapers. The neighborhood was built mostly in the 1970s as an upscale development on 160 acres near Bryant and Danforth. The home designs and layouts of around 2,500 to 4,600 square feet are as individual as their owners. Blue pools reflect swaying ripples of midday sun on the walls of most homes.
Commuting home from work, Michael noticed small changes. The neighborhood’s common areas thickened with higher grass. Entrances and community gardens designed to welcome with flowers and neatly trimmed landscaping were neglected. Individual homeowners were becoming more lax about their own upkeep, too.
“It was in bad shape,” said Mary, now 33. Kickingbird had weathered a recession, but by 2010, Michael, Mary and other homeowners had seen enough to show up at a homeowners’ association meeting. “We watched things deteriorate, and we really wanted to go to the meeting – find out what’s going on,” Mary said. “That’s when we found out nothing was going on.”
to those two very simple things.”
Vice President of the Kickingbird Estates Homeowners’ Association
They discovered that the faithful guardians of the neighborhood were older and less capable of taking care of things for everyone else. They unceremoniously were told that the Kickingbird Estates Homeowners’ Association no longer had a president or vice president. The remaining board members had a question for the people who showed up: Anyone want to volunteer?
“We were voted in that night,” Mary said.
“I felt like if it’s not going to get done, I’m not one to sit by and watch the neighborhood go downhill,” said Michael, 34. “So I volunteered to be president. Mary, being the great wife that she is, knows my personality and that we make a good team. Her attitude was that, ‘If you’re president, I’ll run for vice president.’”
Most homeowner covenants crafted in the 1970s are not what you’d call ironclad or nitpicky. The tough clauses for Kickingbird ran along the lines of banning things like raising cows in your backyard. “You’re really going off people’s good intentions to take care of their home and yard,” as Mary describes it.
Homeowner dues were voluntary. The new neighborhood leaders fixated on changing that. Keeping up neighborhood appearances takes money, and anyone who doesn’t help pay for it in a voluntary system is taking advantage of their neighbors’ generosity. All Michael and Mary had to do was persuade 60 percent of their neighbors to make it mandatory. Good luck with that, they were told. It had been tried in the past.
As with many political landscapes inherent in homeowner associations, suspicions abounded. Was money misused in the past? Why should I give money when it’s already voluntary? Why should I trust you new guys?
Handicapped with a 10-page amendment packet for homeowners to sign, Michael and Mary appealed to common sense. Every weekend for two months they knocked on the doors of nearly 200 homes. Olivia, tagging along in a stroller, was temporarily petrified whenever dogs answered.
Voluntary dues participation was falling to 60 percent among the 230 houses. It was enough to get the neighborhood’s basic needs met, but what happens as more and more drop out? Michael and Mary broke down the cost of streetlights, landscaping and all the other expenses for each homeowner who’d listen.
A few phone callers accused them of hoodwinking people; meeting their neighbors on their doorsteps was far more successful. Their work paid off in a slim approval. With a few exceptions, most homeowners are now required to pay dues – a whopping $150 a year.
The influx of funds solved the maintenance beefs. Due to its legacy roots, Kickingbird today is a lush and leafy neighborhood with a plus: involved neighbors. With no common park, Kickingbird residents with sprawling lawns volunteer them for community Easter egg hunts. A revitalized email and cell phone network connects neighbors in need with neighbors who want to help, whether it’s a trip to pick up medicines or to babysit for an hour. All it took was some heart and a little chutzpah.
“We really want to be a team of people who can serve each other, take care of each other, love each other, know each other,” Mary said. “We were realizing, especially when we did the amendment, that people in here didn’t know each other. They don’t know that somebody from their kid’s school lives next door. We wanted to change that culture because we feel like we have a good thing going here and it just needed to be nurtured. We really felt like we were young and crazy and could pull it off.”
The couple’s formula for a vibrant community is philosophical – even idealistic.
“Love your neighbor and do unto others,” Mary explains with a smile. “It really comes down to those two very simple things. If people will live in a way that they know they would want to – the way they take care of their home and families – other people will too.
“It’s very contagious. It’s been proven that it’s contagious. And I think everything will fall into place. I really do.”
Michael and Mary’s Tips to a Better Neighborhood
►Plug people together. When people know each other, they feel more accountable about taking care of their homes and property for their neighbors’ sakes – and helping out in their times of need. “I would say the biggest way to have any sort of neighborhood turnaround is to have people who care about each other,” Michael said. “When you find out what’s going on with your neighbor, people will go out of their way to do things they normally might not do.”
►Use technology. A website is a given. Add a voluntary email contact list, password-protect more private communications and you’ve got a network for 21st-century neighborly camaraderie.
►Embrace the touchy subjects. Since you know your neighbors now, you can bring up things like offering to take their trash bin to the side of the house if they regularly leave it out way past pickup time. If that’s a bridge too far, ask the association leaders to bring it up. They can tell your neighbor that people have noticed.
►Consistency counts. If your homeowners’ association is a steady force of committed people working together and willing to help, regular contact about illegally parked boats, overgrown lawns and other nuisances gets easier over time.
►Your city can be your friend. Embrace city employees. “The city of Edmond is amazing,” Michael says. Get to know your local code inspector, the people in charge of changing streetlight bulbs and the heavy maintenance crews who tame your water main breaks.
►Be financially creative. A homeowner once confronted Mary about chicken nuggets given to kids at a neighborhood event. A misuse of homeowner dues? Nope. Ad sales from the association newsletter paid for them.
A Market Feelin’ Hot, Hot, Hot
Taking the temperature of buying fever in central Oklahoma. (Stats apply to the metro as a whole for June.)
Up 33 percent from the same month last year.
Nearly 10 percent higher (9.6 percent) than last year.
Days on Market Before Sold
37. Two years ago, it hovered around 60.
Existing Housing for Sale
7,249 – an 18 percent decline from last June.
Sellers hit them 98 percent of the time, same as last year.
Or how long it would take to sell off every listing if no new properties came on the market – 4.6 months. Less than five months is considered a seller’s market. Last year, it was at 6.2 months, a buyer’s market.
Source: Oklahoma City Metro Association of Realtors
If battling multiple bidders is wearing you down, consider improving in place – or buying ugly.
Anders and Terry Carlson subscribe to a renovation formula that’s been making over the look of Avondale Drive in Nichols Hills for years. Their alchemical secret? Making one plus one equal three.
Although best known for its stunning mansions and sprawling lawns, the 84-year-old city-within-a-city’s manicured masterpieces share 2,700 acres with thousand-square-foot bungalows. G.A. Nichols intended it that way. Half-century-old stately homes with small, walled-off rooms typical of their day – and perhaps with dangerously worn electrical systems – demand renovation as much as carriage houses with window air conditioners.
Regardless of a home’s size, the Carlsons’ calculus works in any neighborhood: One – take the plunge to renovate your devalued house. Two – create a second value in the form of an upgraded lifestyle. Three – those two moves boost value of an old home. Perhaps the Carlsons’ principle is better explained with their advice to buy the ugliest house on the best block.
“You spend the money to buy the house, you spend the money to renovate the house, and the house will be worth more than that later,” Terry explains. “One plus one equals three.”
The Carlsons’ enterprise, better known as AC Dwellings LLC, stands out for its makeover work in Nichols Hills and Gaillardia in northwest OKC and its holistic approach to a given property.
“When we renovate a house, it’s very important to us that we’re not just working on the interior,” Terry said. “Let’s say you buy a $500,000 house, and you’re willing to spend $300,000 renovating it to the studs – everything new.
“We wouldn’t take that project on if we could not convince our client that we need to make the outside of that house look like a million dollars – because we want to protect their investment, not a $500,000 house where you can’t see what’s been done inside. Because sitting on the street, that’s not good for the house. It needs to look like it.”
People choosing to renovate usually share the same motives: They feel like they already live in a great neighborhood, their neighbors are good friends and they’re often just sentimental.
“A lot of people love their home,” Terry says. “They’ve raised their kids, it has memories, they bought it for a reason when they bought it. They’re attached – that’s human nature.”
Reasons to renovate vary. A great layout for a family may work less so for empty nesters. Décor and finishes wear and become outdated. Older homes aren’t energy efficient.
Anders and Terry’s renovation projects are often so expansive and huge that people sometimes mistakenly believe they’ve built a new house on the home’s footprint. That’s because they “blow up” original designs. They’ll elevate replacement roofs as they heighten existing exterior walls and extend room lengths. Exterior touches such as wrought-iron fencing, circular driveways, stone walls and dormers unite the structure’s new vigor with the rest of the property.
A renovation’s biggest drawback, of course, is losing a place to live. In the Carlsons’ experience, homeowners are evenly divided between those who stay and tough out the renovation and those who flee the whine of power saws, contractors’ boom-box musical tastes and portable toilets in the yard.
“We encourage them to move,” Terry said. “Our guys show up at 7 in the morning, but we’ll move clients around in their homes if they want to stay. We say, ‘We’re gonna do this first, so you’re going to stay here. Then we’re going to go do that, so move over here.’ I call it living in Smurfdom. We put big plastic sheets up with zippers – clear sheets – but still … Smurfdom.”
However it gets done, energizing homes with new living spaces is Anders and Terry’s passion. “Some people like to save dogs. We like to save houses,” Terry said. “We love that.”