While San Francisco and New York City might be seeing the most dramatic changes to residential real estate this summer, COVID-19 has impacted nearly every market in the nation, and not with the housing collapse that was predicted last March. Many areas, especially with lower costs of living, are experiencing booms as more jobs become permanently remote and mortgage rates remain unusually low.
We sat down with Richard Hauschild, owner and landlord of five rental properties in the Greater Oklahoma City area and realtor for Re/Max First, for insight into how the pandemic has affected his market and what he thinks the future holds for Oklahoma real estate.
YDP: Before the pandemic, what was the market like in the Oklahoma City/Edmond area?
HAUSCHILD: Just like any other city out there, it all depends on area and price range. If you had a listing at ~$150K or less, no matter the location, there was a good chance you would not be on the market very long. If buyers had targets of Edmond/Deer Creek/Yukon schools, that number bumps up to ~$300-$330K.
Now on the other side of the spectrum, before COVID-19 if you had a $400K+ listing in Oklahoma City or Edmond, you had to prepare to sit there for a while because your buyer pool shrinks dramatically in those ranges. Greater OKC had a supply in that range of around 2-3 months, which is extremely healthy. Homes over $500K had a 7-10 month supply in areas.
YDP: How has residential real estate activity in this area changed since COVID-19?
HAUSCHILD: In mid-March, everything SHUT DOWN. By that I mean all showings, open houses, broker opens, etc. The thought of going into other people’s homes, especially occupied listings, didn't register anymore. The only real activity came from buyers that HAD to move, whether that be for a job, for school, or just financially because they lost their job.
I have a listing in the Shepherd Historical District here in OKC. Before COVID-19, it didn't matter what price it was or condition it was in, the area had a days on market average of around 14. Since COVID-19, only the homes that are remodeled or updated have gone and sold, leaving the ones that need love, like my listing, still for sale.
When May 1 hit and we started the phases of reopening, it seemed like the flood gates opened. May-August has become our “spring” boom of transactions – it usually starts in February and lasts until June. I attribute this to two things. First, pent up demand from buyers sheltering in place during this time, and probably looking at every listing on a real estate app. Secondly, the continually crashing interest rates. They are almost giving away money for free. So if you have been sitting on the sidelines with good credit waiting for your perfect entry into the market, you have to feel extremely proud of yourself. Every buyer seems like they are getting 30 year mortgages sub 3%. Most 15 years are around 2.5%.
I have been extremely fortunate on my listing side as well. My three listings since May 1 have gone under contract after 1, 2, and 5 days on market. Their price ranges from $270K-$750K. I have had buyers who had their contracts accepted on listings that had been on the market 0 days. Those ranged from $255K-$395K. All were in desirable areas in solid price ranges so that has benefited us the most.
There are plenty of listings out there that are struggling though, mainly in the $1+ million range. If you look strictly at the Nichols Hills area of OKC, there are currently 57 (!) properties that are $1+ million with an average of 151 days on market (DOM). There are only 2 under contract that also had 151 DOM average. Since March 11 (the day of the infamous OKC Thunder/Jazz game that got shut down) there have only been 13 that have sold within the average of 98 days on market. I attribute the lower DOM number to many being listed or under contract before that March 11 date.
YDP: Are people moving to Oklahoma for lower cost of living now that they have remote jobs?
HAUSCHILD: I just had a young couple move back here from Colorado due to the lower costs of living and more “bang for your buck” in regards to housing. They do miss the mountains, but right now they are focused on starting their family and that made the decision easier for them. To quote them: "Just by moving back to Oklahoma City, we both gave ourselves unintended raises."
YDP: What, in your experience, are home buyers in Oklahoma most interested in right now?
Based on what I have seen, if buyers are looking for existing (not new build) homes, they are leaning towards properties that are more updated than not. Buyers seem to have lost the concept of sweat equity, and since interest rates are so low, they have no problem paying a bit of a premium for a house that is basically turn-key. That is leaving the properties, like my Shepherd listing, in a bit of a gray area. It's not in terrible enough shape for a flipper to make a really good return, but it needs more work than your average homeowner is probably wanting to tackle.
Also, in OKC I think there has been a bit of a flight to the suburbs over the last few years. For older homes, areas like Quail Creek, the Green, and Lakehurst are seeing a serious resurgence. There are plenty of homes in there that have great bones, but just need a little bit of love. Although more expensive overall, Edmond has shown no sign of slowing down across the board. The quality of life, as well as the schools, keep it at the top of the list for a lot of buyers. All the new construction in west and east Edmond is CRAZY. Red dirt everywhere!
YDP: What is happening with investment properties and second homes in Oklahoma? Are rentals affected?
As someone who owns and manages five rental properties, overall I have hit very few snags during this time. I've had to work out a few payment plans along the way with a few tenants, but overall it's been a non-event. PSA to all tenants out there: If you are having trouble with rent, just communicate and be honest with your landlord. The last thing we want to do is evict someone. Trust me.
As far as investing in rentals, it's been pretty eye-opening. The areas where all my rentals are (63rd and May) usually ran around $100-$115/square foot when it comes to price, with the max price point around $120,000. With no apartment competition anywhere, you could easily get the coveted 1% rent-to-purchase ratio. However, since interest rates are low, low inventory, and high demand, these homes are going for WAY more than I thought they could. Some have even pushed the $175K range! This has basically shut out all investors wanting to buy in there. So while that's great for me if/when I want to sell, it prices me out right now because my rate of return dramatically decreases. Overall it improves the neighborhood, however, since you don't want the vast majority of homes to be rentals.
YDP: Where do you see the market in one year as the pandemic continues?
I have a real hard time believing that the country will be shut down again. That being said I think real estate and housing will fall back in line starting this winter. It will eventually slow down like it usually does starting in October, then pick back up in February and never miss a beat.
That aside, I think you will still see some of the same rules stay in place for the next year or so. Some of those will be: limited open houses, prequalification letters to even see a property, masks for buyers looking in occupied listings, hand sanitizer everywhere. While some don’t mind the concept of "looky loos" some of these practices have been eliminated altogether. We probably should have been doing these all along, but sometimes you get used to doing things a certain way, and it takes an unfortunate situation to whip everyone back in shape.
Born and raised in Edmond, OK, Richard Hauschild has lived in greater OKC all his life. In early 2015, he decided to invest in some rental properties. He loved the excitement of negotiations, working offers and closing deals. Later that year, he decided to pursue a career in real estate. He joined Re/Max First in OKC in January of 2016 and has been there ever since.