Summary
We are starting to see the effects of low oil prices on the Oklahoma City metro area real estate market. Luckily the Oklahoma City and surrounding areas economy is much more diversified than in past oil “busts” so the drop is not nearly as dramatic or devastating as we saw back in the 1980’s. In addition, the national economy is very strong right now so that is helping to strengthen home prices in the area. The Tinker Air Force Base complex is booming with business, Boeing Aerospace continues to add good paying jobs to the local economy, our downtown OKC revitalization efforts have attracted a young, vibrant, entrepreneurial crowd, and for the most part our local economy is still very good, although not as strong as it was in early 2015. Interest rates remain low so if you are looking to buy a home, this is a great time to buy. It is important to remember that although the graphs are trending downwards, they are coming down from historical highs to more normal levels.
Average Oklahoma County Home Sale Price drops
The average home sale price in Oklahoma County peaked in early 2015, dropped a bit and then flatlined as oil prices dropped and companies absorbed the changes, and in late 2015 the average sales prices for a home in Oklahoma County started dropping, although still well above the price in most of 2014. This correlates to local oil company layoffs happening statewide.
Average Days on Market for home sale drops for Oklahoma County
As you can see by the following graph, the average days on market for homes in Oklahoma County spiked in November 2015, then dropped back down to more normal and healthy levels in 2016. Most Realtors will tell you a 60 day days on market average is a healthy and normal average. So this is a bit of good news for home sellers – the market hasn’t dropped precipitously – buyers are still buying homes and there is still a demand for quality homes. We see this in our daily sales – a good home still sells fairly quickly, although we don’t see the multiple offer situations of the past except on prime properties at great prices. A year ago it was considered a “seller’s market”. Now the market is much more balanced.
Listing Price vs Selling Price gap continues to widen in Edmond
Early 2015 was considered a “sellers market” in Edmond, with homes selling for nearly the listing price. Homeowners were seldom discounting their home from their asking price yet were still able to sell homes. Of course, if a home is overpriced it still must drop to a realistic price, but the comps were catching up to the asking prices so sellers were not compelled to drop price much lower than market value and more importantly, the comps supported these prices.
We are seeing that change in late 2015 and early 2016 to more of a “balanced market”. Based on our experience the local metro OKC real estate market is not yet a “buyer’s market” but more of a historically balanced real estate market. While selling prices are dropping slightly, days on market is stable and homes are selling every day. Sellers now have to “give a little” to get their homes sold. This can be discount on the price, added repairs or improvements, paying the buyer’s closing costs, or other incentives to attract buyers. These incentives are not huge closer to what we consider a normal, balanced market.
Edmond Median Home Prices Drop
The median home price in Edmond has dropped since mid-2015, as would be expected. As this chart shows, the median home prices can vary up and down significantly over time but is generally trending upwards. It is important to realize that a single multimillion dollar home sale can significantly skew the numbers in a single month.
It is to early to tell if this recent drop will continue but based on our daily working in the Edmond market, we still see a very strong market in Edmond with the sweet spot still in the $250,000 range.
Conclusion
Based on our experience and the work we do daily in the Oklahoma City metro real estate market, we have definitely seen the effect of low oil prices and the resultant job layoffs. However, the impact hasn’t been as great as the oil bust of the 1980’s. The housing market is still strong in central Oklahoma, the economy is much more diversified, the low gasoline prices are helping a lot of local non-oil related families, and the national economy is strong and interest rates remain low. We expect sellers will need to make sure their home is in peak condition prior to listing, that their pricing is realistic, and they be willing to negotiate with a qualified buyer. Good homes are still selling at strong prices.
And buyers shouldn’t expect to snatch up “deals” that are well below market value. There is no fire sale of homes going on because of the low oil prices. Buyers can find a nice home at a very fair price, but there are plenty of buyers still on the market so home prices are holding steady although dropping slightly.