OKC Real Estate Market

[bison34]

With home ownership, you don't reap the rewards until you sell. Until then, you are 100% responsible for all repairs and maintenance, and most of those won't improve the value of the house.

So sure, you can benefit from owning, but unless you rent out your house, it's a liability, not a true, cash-earning asset.

[Pete]

You can get a very low-interest loan against your equity at any time.

In fact, you can take out almost all the down payment you put in.

You can also use your house as collateral for other loans. It's a true asset and you absolutely do not need to sell it to access the equity.

[Teo9969]

With home ownership, you don't reap the rewards until you sell. Until then, you are 100% responsible for all repairs and maintenance, and most of those won't improve the value of the house.

So sure, you can benefit from owning, but unless you rent out your house, it's a liability, not a true, cash-earning asset.

Outside of the earliest years of ownership, it's almost surely not a liability.

Almost all assets have a liability factor. Assets don't have to produce cash to not be a liability...but even taking up that argument:

If rent in your area is around $1,500 for a property equivalent to your home and the interest, taxes, and insurance only totals to $1,350 (even though your mortgage payment is $1,600), you are effectively improving your balance sheet by $150.

Opportunity cost is an actual cost. People talk about the cost of raising kids from a money out the door equation but I can assure you I have left 3x more money on the table than I've spent on my child because I don't have the time or energy to go make that money. Same can be said of delaying home ownership in all but a few markets in this country.

And ditto on the equity tapping. I've done that so many times and it has allowed me to do so many things from consolidating debt to buying vehicles outright, purchase other property and even invest the stock market (still kicking myself for not immediately plowing all of my cash out refinance proceeds into the S&P in 2020)

[gjl]

The only time I ever rented was before the age of 22. Home ownership from then is allowing me to now live in a $350-$400k house on a 1 acre property that has been paid for since 2011 for only the cost of taxes and insurance. Maintenance and repairs is not very much and what ever is needed I can usually do myself. Been that way my whole life. No one can do things like I can do them or want done. Some major things I've paid for over the years like a new sewer line, new HVAC, both baths remodeled, kitchen remodeled. Even some of the remodeling I've done parts of. All major repairs don't even come close the the appreciation in value the house has gone up since 1996 when I bought it. Things like minor plumbing and painting I can do. At age 69 it is nice to have that equity in my retirement years should I need it and the cost to live here is easily affordable in retirement.

[OKCRealtor]

Outside of the earliest years of ownership, it's almost surely not a liability.

Almost all assets have a liability factor. Assets don't have to produce cash to not be a liability...but even taking up that argument:

If rent in your area is around $1,500 for a property equivalent to your home and the interest, taxes, and insurance only totals to $1,350 (even though your mortgage payment is $1,600), you are effectively improving your balance sheet by $150.

Opportunity cost is an actual cost. People talk about the cost of raising kids from a money out the door equation but I can assure you I have left 3x more money on the table than I've spent on my child because I don't have the time or energy to go make that money. Same can be said of delaying home ownership in all but a few markets in this country.

And ditto on the equity tapping. I've done that so many times and it has allowed me to do so many things from consolidating debt to buying vehicles outright, purchase other property and even invest the stock market (still kicking myself for not immediately plowing all of my cash out refinance proceeds into the S&P in 2020)

I stress this all the time, it's the most expensive cost of all when it comes to not owning. I also stress at a minimum everyone max roth IRA contributions early as well. I'm not a financial advisor but simply just buying property at a young age + maxing roth IRA yearly will set you up big time later on. These are just what I'd consider basic & fundamentals to get you way ahead years down the road. The opportunity cost of not doing either of them is detrimental, lots of six - eventually 7 figures.

[bamarsha]

With home ownership, you don't reap the rewards until you sell. Until then, you are 100% responsible for all repairs and maintenance, and most of those won't improve the value of the house.

So sure, you can benefit from owning, but unless you rent out your house, it's a liability, not a true, cash-earning asset.

Do you consider a 401k a liability also? I mean, the stocks could go down, right?

[bamarsha]

I stress this all the time, it's the most expensive cost of all when it comes to not owning. I also stress at a minimum everyone max roth IRA contributions early as well. I'm not a financial advisor but simply just buying property at a young age + maxing roth IRA yearly will set you up big time later on. These are just what I'd consider basic & fundamentals to get you way ahead years down the road. The opportunity cost of not doing either of them is detrimental, lots of six - eventually 7 figures.

Two steps often deemed more important that the Roth (though not available for all)... First, get the employer match on the 401k. Second max out the HSA contribution on a high deductible plan (can invest over $3k, with tax benefits). But I am not a financial advisor either.

[jn1780]

With home ownership, you don't reap the rewards until you sell. Until then, you are 100% responsible for all repairs and maintenance, and most of those won't improve the value of the house.

So sure, you can benefit from owning, but unless you rent out your house, it's a liability, not a true, cash-earning asset.

Have to live somewhere though. Hopefully if you played your cards right that house will pay your assisted living bill in the final decade of your life or a less depressing viewpoint of downsizing to a smaller home.

[OKCRealtor]

Two steps often deemed more important that the Roth (though not available for all)... First, get the employer match on the 401k. Second max out the HSA contribution on a high deductible plan (can invest over $3k, with tax benefits). But I am not a financial advisor either.

Sure if you have access to a 401k then you've got another consideration but many don't. I never did, personally. I invest in SEP IRA's in addition since I'm self employed now but I still max out our Roth's even though it's a smaller amount because tax free investment > all and I started those many years before I could take advantage of a SEP.

If you just buy a house young & take advantage of Roth's if you do nothing else you will still be totally set if you stay the course. Even doing it for a decade starting in your 20's gets you multiple 6 figures ahead of peers who didn't by time your in 30's. I consider these foundation pieces for majority of scenarios and of course there's a lot of other opportunities to be had depending on your situation.

[oktxatty]

With home ownership, you don't reap the rewards until you sell. Until then, you are 100% responsible for all repairs and maintenance, and most of those won't improve the value of the house.

So sure, you can benefit from owning, but unless you rent out your house, it's a liability, not a true, cash-earning asset.

Binary thinking

[davidreavis]

I’ve always found real estate prices to be high, and on a steady upward trend, so I’ve conditioned myself to avoid hesitation when the right opportunity arises, though, of course, not without careful calculations and analysis. Getting to my main point, my small experience buying a house in Vail, Colorado, I’ll start by saying I saved up for quite some time to afford a more luxurious home. As for location, I’ve always been someone who prefers winter and mountains over summer and the sea. Vail checked all those boxes, and that was that. The rest was straightforward, thanks to Morghan Jabusch, who made everything smooth and quick. And if anyone’s interested in investing in a home in Vail, you can find him here: bestrealestateagentaspen.com.

[Plutonic Panda]

It would be a dream of mine to buy a home in Vail or Aspen. Maybe one day. Vail is extremely nice because it’s right off of the 70. Aspen, you have to deal with 82 Traffic. And then at certain times of the day it’s only one lane each way unless you have a passenger. I’ll never forget how shocked I was at how many private planes they had at that airport. Telluride and Breckenridge seem cool too, but very touristy. I go to Nederland a lot when I camp at the Kelly Dahl campsite. And then when I wanna gamble, I go to Blackrock. I do want a beach house as well somewhere along the coast of Northern California perhaps Oregon. I just have too expensive of a taste without the pockets to be able to afford it. But that’s awesome you got a home in Vail. Congratulations. I go to that little urban development a lot and walk through it and sometimes I’ll drive up the mountains and look at the amazing homes and a couple of them have these Brooks with waterfalls that go in between them. It’s so peaceful.

[davidreavis]

Yeah, Aspen traffic can be a pain, but Vail is much easier to get to. Those homes with brooks and waterfalls are so peaceful! A beach house in Northern California or Oregon sounds amazing too, definitely a dream.

[OKCRealtor]

Figured I'd give everyone one more market update as we enter December and wrap up 2024, I can't believe it's almost over. It was once again certainly not what anyone was really hoping/expecting. We are still staring down nearly 7% 30 year conventional loan rates & long term expectations on rates have moved higher through next year unfortunately. That said:

Prices have moved up 5% year over year, similar to 2023 overall. Although we are in a seasonal/election/dip the trajectory is pretty clear prices will still continue to rise overall even in a restrictive rate environment.

Inventory has exploded- we are getting close to 8,000 properties in the MLS. Last time we had this many houses for sale was 2011 before the market finally recovered from the sub prime crisis. Interestingly enough there are less sales taking place in this environment than there were then even though the macro conditions are much better.

23 & 24 collectively will certainly go down as the least affordable years of any of our generations to buy a property. There are some comparisons to early 80's when everything was real crazy on rates but by and large things have never been this unaffordable. The 20's are shaping up to be the complete opposite of the 10's when we had record high affordability.

2024 will go down as the worst year on record for the country in total number of homes sold. If you've bought anything in the last couple years- congratulations! It blows my mind sales are worse than the great recession.

Looking forward affordability doesn't look to improve at least given most of the rate forecasts/expectations staying in the 6-7 percent range long term. Overall I'm starting to see a more balanced market with buyers making definite plans now & sellers also getting off the fence.

Just about everything looks good economically other than mortgage rates, so long as we don't have an unexpected recession or economic crisis things should gradually improve from here all things considered. It will be very interesting to see if inventory continues to grow next year or we balance back out. If we have another repeat of this year we might have more homes listed than at any point in our entire history. So much for a low inventory environment.

2025 is a total wildcard at this point IMO, there's certainly the chance it could be really good but most experts only see a small recovery with affordability possibly worsening more. We shall see what the new administration can do & if they can affect any change. Either prices or rates need to come down some and neither looks likely to occur. If you can't find what you're looking for in this environment though it probably doesn't exist.

[VeggieMeat]

Last time we had this many houses for sale was 2011 before the market finally recovered from the sub prime crisis. Interestingly enough there are less sales taking place in this environment than there were then even though the macro conditions are much better.

While I'm actually shopping in a different region of the country (the last few summers here have done me in), something I've noticed is a significant amount of ARMs about to kick in with current rates on pandemic properties in that region. Is that possibly also one of the factors here?

[OKCRealtor]

While I'm actually shopping in a different region of the country (the last few summers here have done me in), something I've noticed is a significant amount of ARMs about to kick in with current rates on pandemic properties in that region. Is that possibly also one of the factors here?

I don’t believe so, very few people have taken ARM’s. At least in the residential market anyways.

[BoulderSooner]

I don’t believe so, very few people have taken ARM’s. At least in the residential market anyways.

if someone took a ARM during the lowest interest rates (basically of all-time) they very much deserve what they get ..

[bison34]

if someone took a ARM during the lowest interest rates (basically of all-time) they very much deserve what they get ..

I mean, 2019 and early 2020 were pre-Covid. So those people don't necessarily deserve it. If they took one in late 2020 or 2021, then I agree with you.

[Jeepnokc]

if someone took a ARM during the lowest interest rates (basically of all-time) they very much deserve what they get ..

On commercial loans...most banks won't do a fixed. We got nailed with that last year but things have gotten better. 5 year ARMs in 2019 were tough when they adjusted. We had to refi a few properties to get them back to positive cash flow.

[BoulderSooner]

On commercial loans...most banks won't do a fixed. We got nailed with that last year but things have gotten better. 5 year ARMs in 2019 were tough when they adjusted. We had to refi a few properties to get them back to positive cash flow.

i should have specified residential .

[OKCRealtor]

I only know of 2 people that have done an ARM on residential, one was family of my wife & another was a very high net worth client I had in 22. Family ended up selling in 22 and rented for a year before purchasing again last year. Both of these scenarios are for folks in top 1 & 2-3% respectively income wise so they could afford the risk. Otherwise an ARM on residential made virtually no sense for a decade until the last couple years perhaps. Even then I think still ill advised for most people unless you can really afford the risk. No guarantee rates aren't going up still.

[sooner88]

I only know of 2 people that have done an ARM on residential, one was family of my wife & another was a very high net worth client I had in 22. Family ended up selling in 22 and rented for a year before purchasing again last year. Both of these scenarios are for folks in top 1 & 2-3% respectively income wise so they could afford the risk. Otherwise an ARM on residential made virtually no sense for a decade until the last couple years perhaps. Even then I think still ill advised for most people unless you can really afford the risk. No guarantee rates aren't going up still.

ARMs were a lot more attractive over the last 2-3 years with the rapid increase in rates. I was able to lock in a 7/1 ARM 2 years ago for 4.75% when the best 30 year option I could get was 7%+ .There's obviously some risk there, but the reality is we'll either refinance or sell our house in that 7 year period.

[OKCRealtor]

ARMs were a lot more attractive over the last 2-3 years with the rapid increase in rates. I was able to lock in a 7/1 ARM 2 years ago for 4.75% when the best 30 year option I could get was 7%+ .There's obviously some risk there, but the reality is we'll either refinance or sell our house in that 7 year period.

Yea I'm sure there's a few people here & there like you who have done it but by and large from all of the transactions I have done and see come through all of my clients at least have stayed fixed. Rate buy downs either from builder if purchasing new or even from some sellers in the used market have been more common.

[Canoe]

People on my network are talking recession in late 2025 through 2026 with interest rates falling to unlock the housing market. OKCRealtor, what are the chances of this scenario occuring according to your network?

[OKCRealtor]

There’s always the chance we could have a recession but most of the economic indicators are pretty strong overall. I don’t think it’s the base/expected case from Fed or most economists.

I think reality is we have no idea what we’re getting next year. We are going to get a huge shake up & change of policy direction. If Trump is serious about DOGE and let’s Musk/Ramaswamy go to town and starts slashing federal jobs and budget all bets are off IMO.

The economy has been so propped up by massive amounts of government spending & federal job creation last couple years that if that rug gets pulled no telling what short term effects are. Even if the funds rate goes down it doesn’t mean mortgage rates will. There’s an enormous amount of pressure on government bonds and the 10 year which mortgage rates most closely track. It’s why mortgage rates have gone up roughly 75 basis points while the fed has cut their funds rate 75 basis points this fall.

What’s your network looking at thinking? I honestly think we would have been better off if we had recession but the government propped it up with $10 trillion to the deficit since 2020 so it’s not like they’ll just let it happen. I know some people out there believe they will force one and try to reset things. It’s almost like we need one.

Gotta keep in mind that Trump is very pro equities & real estate, he wants to see them do very well & get the rates down not force a recession. In theory if we can get some of the government waste under control it should take some pressure off treasury yields and relax the rates. The real reason they can’t get them down is all of the Biden admins massive spending but financial markets actually think Trump will be worse so it’s a real interesting time. That’s why mortgage rate expectations have moved quite a bit higher since the election & virtually every economist is upping their long range projections which is a sign of economic strength as well.