OKC Real Estate Market

[OKCRealtor]

i don't think we are currently on track for any rate cut this year ... and especially not 4-5 in the next year ..

It's all about the labor market at this point which is continuing to show signs of weakness. Fed sees the funds rate being 125bps lower by end of next year. They could very well be wrong again though.

I don't see how they can do 4-5 rate cuts and hope to dampen inflation. My business has been hammered by higher rates so I hope it happens but I think it will be 2026 before we see any major cuts.

PCE is running at 2.7% annual right now which isn't far off the arbitrary 2% target. If not for some very misleading ways home & shelter are calculated we would pretty much be there already. Leaving rates unnecessarily high is only driving real inflation up. Home prices & borrowing costs are not calculated in CPI or PCE but have an outsized effect on real inflation. Not to mention the divergence with the rest of the world cutting rates now - ECB, Canada, etc are going to create big risks here if they leave our rates high and more money starts flowing in here driving real rates & inflation up more.

[BoulderSooner]

Leaving rates unnecessarily high is only driving real inflation up. Home prices & borrowing costs are not calculated in CPI or PCE but have an outsized effect on real inflation. Not to mention the divergence with the rest of the world cutting rates now - ECB, Canada, etc are going to create big risks here if they leave our rates high and more money starts flowing in here driving real rates & inflation up more.

rates are now around historic norm ..... they were artificially low for 10+ years ..

[BoulderSooner]

it is very very likely that we won't see rates below 5.5 or so in the next 40 years ..

[Canoe]

I know a few homebuilders are less optimistic than they used to be a few months ago. They have decided to focus on developing their current lots instead of purchasing new lots. They expect their inventory to sell slower than they predicted. They think there is pent up demand, but the current conditions are keeping prices high (the cost to build a new house, $160-$170 sf) and the demand for new houses restricted (higher and recent interest rates).

[BoulderSooner]

I know a few homebuilders are less optimistic than they used to be a few months ago. They have decided to focus on developing their current lots instead of purchasing new lots. They expect their inventory to sell slower than they predicted. They think there is pent up demand, but the current conditions are keeping prices high (the cost to build a new house, $160-$170 sf) and the demand for new houses restricted (higher and recent interest rates).

my builder friends feel like prices will go up significantly if there are multiple rate cuts ..

[Canoe]

my builder friends feel like prices will go up significantly if there are multiple rate cuts ..

They are probably right, but they will need to get through the next 6-9 months in good condition.

[Rover]

They are probably right, but they will need to get through the next 6-9 months in good condition.

Great.. rate cuts that spur inflation of prices. Cheap money, create more money through debt, deregulate and make it easy money... easy debt, more money chasing goods. Guess some didn't learn anything from 2008.

[OKCRealtor]

Eventually things are going to level back out. Prices are basically flat year over year now and which direction they go from here depends on the direction of rates. I doubt we see much of a dip but I'd say next 6 months might create some opportunities. I'd be surprised if prices come down much if any but I think rents will skyrocket over the next few years as they trend back in line with what it cost to buy a home. Never has there been such a large difference as now.

Of course if they can cut rates multiple times without a recession almost certainly home prices are going to go up steadily as rates go down next couple years like they anticipate.

It's such a weird market, especially with the stock market absolutely booming and many people so flush if they were smart and invested in both real estate and equities all this time.

[Bowser214]

Just saw article about home prices are coming down in boom towns like Austin and Tampa.

[BoulderSooner]

It's going to be interesting to see if we hit new average all time highs at the end of this month or next. We were only slightly higher than where we were a year ago coming into June and the trends of last 2 years in this environment suggest we will hit new all time highs. It really depends upon the price point though- sub 300k is still going strong.

It sounds like we are on track for a December rate cut and then several more next year potentially. I could see prices pulling back a little again in the Fall, just like last 2 years, if rates stay high until then. So far they are trending down on lighter inflation data over the last few weeks which should help.

Fed's Khaskari said on face the nation yesterday best thing they can do for the housing market is get inflation back to normal. If they cut it's likely to drive prices up and not help affordability. I don't agree with his first statement but certainly the second. If we get 4-5 rate cuts like projected between now & this time next year there will be a lot of demand. In a perfect world the additional supply would help balance it out but there will still be a lock-in effect that will handicap the market long term so there's still going to be a supply/demand imbalance at least at the affordable price points.

fyi

Federal Reserve Governor Michelle Bowman said Tuesday that she does not expect to cut interest rates before the end of the year – and remains willing to hike again if progress on inflation stalls.

https://www.foxbusiness.com/economy/...rate-cuts-year

[OKCRealtor]

fyi



https://www.foxbusiness.com/economy/...rate-cuts-year

Yea I saw that, nothing new really. I don't think it's the base case at this point but there are notable upside risks. I think it's more about the labor market at this point & which side of the dual mandate they'll favor as things continue to weaken.