Realtors, Buyers battle for OKC's most competitive housing market YEt.
At the beginning of 2020, the housing market was like every year and then the Pandemic hit. Oklahomans were forced to stay at home, some working from home and others not as fortunate.
The pandemic mostly hurt Oklahoma's hospitality and restaurant sectors. The Federal Government's stimulus package including the unemployment bonus, helped people's incomes rise during the recession, but they weren't spending as much as they were making. It should be noted that people who are on unemployment cannot purchase a home because Lenders need to have employment verification. Lenders and down-payment assistance programs tightened up lending requirements making it difficult for low-income/entry level homebuyers to take advantage of the low interest rates. Gas stations, restaurants/bars, clothing boutiques and gift/souvenir stores are down in sales compared to liquor, online shopping, building/garden materials, and sporting goods increasing in sales. This shows us that if people who worked in the hospitality/restaurant sectors lost jobs during the pandemic, they should consider working in the construction trade where there is more opportunity and consistency due to the lack of housing inventory.
What we learned during this pandemic was that 90% of people were willing to tour a home during COVID. In fact, new home sales skyrocketed for First-Time Home Buyers in the first quarter of the pandemic. While this surge, in addition to all-time low interest rates (in the 2's and low 3's), resulting in low housing inventory rates. While it was already low prior to the pandemic there was a major drop in inventory due to people's willingness to find stability in housing. Prior to the pandemic, we saw only 5% of people working from home, while now we see 1/3 of people now working from home. This is made possible through more access to internet in suburban and rural areas. The National Association of Realtors (NAR) is working to expand broadband access to more rural areas through the infrastructure bill.
In the past, homebuilders were able to accommodate the demand in the suburbs, but in today's world, the Homebuilders are not able to do that and we have seen across the nation their inability to catch up. Part of the issue stems from the costs of lumber and other construction materials increasing due to the Pandemic. Lumber supply isn't as abundant due to the lack of trade agreements between Canada and the US. But the other problem is the city of Oklahoma City.
For decades, the City of Oklahoma City has listened to Developers who are driven by money paid by Homeowners instead of the Professional City Planners. City Planners have predicted for years the need for change within zoning practices as a result of the massive amounts of the human population transitioning from rural communities to the city, in search of more job opportunities throughout the decades.
The first wave to the suburbs was post World War II when soldiers came home to a lack of inventory, suburban tract homes were built. Unfortunately, during this time, Black ownership was denied. Which explains the large gap in generational wealth amongst Whites and Blacks. The second wave occurred during the 1970's, commonly known as white-flight as a result of de-segregation in the schools and neighborhoods. The third wave is here resulting from employee's ability to work-from-home.
When it first began during the second wave, Planners knew that the mass exodus was not sustainable and now in the third wave, it has come to a head. City Council needs to address critical zoning changes NOW. They need to expedite the implementation of the comprehensive plan and include detached accessory dwelling units -DADU's (detached apartments on single family and multi-family lots) and commercial dwelling units- CDU-(think work space on the first level, living on the second level) as seen in thriving downtown main streets.
Prior, to the implementation of zoning laws in the 1920's, Homeowners and Builders could construct DADUs and CDUs which is why you will find them in historic neighborhoods. Today, these out-dated zoning laws and minimum square footage/height requirements have no place in today's society. While Homebuilders sell their homes for more profit if the community has zoning, this is impractical and unsustainable towards our city's infrastructure and costs. There is not enough density in the suburbs to continue this kind of ill-considered growth. Cities outlive people. Therefore, we should be building for the future, not for the present.
The reason these changes need to happen now is because currently, more homes are going under contract (pending) than they are going on the market. For entry level housing between $88,000-152,000, the median days on the market is 4 days. Homes priced between $153,000-238,000 are selling a median of 7 days on the market. It would be less than 4 days but Sellers are capitalizing on the multiple offer situations which means the house sits on the market an extra 3-4 days to give Home Buyers plenty of time to submit or modify their offers, and time for the Seller to consider which one they want to do.
The minimal days on market shows that we are in a Seller's market. While we have been for years, it has never been this unbalanced. Homes are selling well over-asking price, signifying the low supply seen in the graph below. We are currently at 1 month's supply and the trend is tethering to a matter of weeks. In an ideal balanced market, we want to see 6 months supply.
Because of the low month supply, expect to see housing prices skyrocket like other big cities and the lack of accessibility for entry level housing. In addition to effecting our local economy. But this can't be the normal. We need entry-level housing. Entry-level (Affordable) housing which consists of people that live in your family. The daughter that just had her first baby and wants to live next door to her parents, the family who wants to live close to their aging parent(s) who want to age in place instead of go to a retirement home, etc. We need more multi-generational living. Entry-level housing can be accessible through ADU's, duplexes, triplexes, and other multiple family housing, but we need more relaxed zoning. Examples of ADUs include basement apartments, backyard cottages, in-law suites, and garage apartments (detached accessory dwelling units -DADu's). Real Estate is a driving factor in our local economy. If there are not enough homes to sell, many people will be out of jobs. Real Estate provides many job opportunities Realtors, Electricians, Plumbers, Landscaping, Appliance Sales, construction materials, Attorneys, Title Companies, Handypersons, graphic designers, auto sales, Insurance, Printing Companies, Staging, Photography, sign companies, restaurants for meetings, etc. The list goes on.
My call-to-action for Oklahoma City Council is to accelerate the implementation of DADU's, CDU's and removal of minimum square footage requirements in new and old developments. Time has shown that having a small house or multi-family next to a large house does not hurt the value of the neighborhood, but allows for makes for smarter growth and more opportunity for the community to grow together. Before long, we won't have enough housing stock (let alone affordable) and it will still be illegal to build a garage apartment. Before too long, our children and their children will have not be able to afford to move out of our homes because it will be too expensive. Let's start building for our City's future generations together.