Oklahoma City Housing Affordability Underlies Market Health
Every now and again Forbes magazine assembles what it calls its “top financial brain power” to comment on a topic of interest. Late last week, the topic was real estate—more specifically, the answer to the question, “Is the Real Estate Market Still Healthy?” Speaking for our Oklahoma City real estate market, I’d have to the answer “yes.”(It’s a cinch I’ll never be asked by Forbes to join the panel because a one-word answer doesn’t make for a very long article).
Their panelists did better at elaborating. They voiced a couple of blanket observations on homeownership in today’s market, then settled on some reassuring points on housing affordability. Their observations are aimed at the nation as a whole, but the conclusions are apt for Oklahoma City buyers and sellers, too:
Point One: The inventory of existing homes for sale continues to be tight just about everywhere. It’s been trending that way for quite a while—and it results in the average days on market continuing to be shorter than usual. Ultimately, that should cause new housing construction to accelerate.
Point Two: The average age of homeowners is gradually increasing. Younger first-time buyers—who have spent their entire working lives during The Great Recession and its aftermath—have been having a harder time gathering the wherewithal to buy their first home. If the latest optimistic projections about the economy prove accurate, those demographics should reverse.
Point Three: Rising interest rates have not had much of an impact on the residential market because the overall level of rates “is low enough right now…The fact is that housing is affordable.” Oklahoma City buyers should be reassured by one investment officer (he oversees $200 billion) who says that housing “still will be affordable even if rates go up another 50 basis points.”
Point Four: In a related point, fixed mortgages are growing in popularity. As we head into real estate’s peak season, that “speaks to housing affordability” because it reflects buyers’ satisfaction with today’s rates: they don’t have to stretch the family budget to handle the resulting monthly payments.
Oklahoma City buyers and sellers benefit when the Housing Affordability Index—the measure that tracks payment amount as a percentage of income—indicates that typical families can qualify for a mortgage loan on a typical home. That has much to do with the real estate market health the analysts were pointing to…and a sign that now is a good time to give me a call!