Oklahoma City Metro's Real Estate Blog

People are always asking me, Josh, what is going on with the market?  I would like to take time out right now and explain my view on this subject.  Let us say that you live in a neighborhood.  In that neighborhood there is anywhere from 100 to 400 homes.  Let us say that over the last 6 months, we have had 4 sales, 3 pending, and 4 homes on the market.  This ideal neighborhood has an average days on the market (DOM) of 90 days.  This neighborhood should be able to retain value and/or gain value.  This is a desirable neighborhood to Buyer's and Seller's alike.

Now let us look at what some neighborhoods are going through.  We have to look at Real Estate from a Real Estate Investment Broker's Eyes.  This example is based off of simple supply and demand characteristics.  Real Estate is a Market and Real Estate is considered an Investment.  We will take the same example and reflect today's market conditions. 

The neighborhood has 100 to 400 houses in it.  Accept, unlike before, we now have 10 sales, 0 pending, and 20 to 40 houses on the market, over the last 6 months.  Now let’s look at the solds and availables a little closer.  The solds have been the Bank Owned Properties (REO), Corporate Properties, and Short Sale Properties.  These are properties that just have to sale; they will discount their prices to move their investments.  This causes Buyer's to be able to purchase Real Estate at a lower price, than would be normal.  The surplus of available, homes on the market, have to lower their prices to become more competitive.

So now you’re asking, Josh, what has caused this?  Plain and simple, it was easy to purchase a home.  Individuals where always upgrading to larger homes.  When times began to get tight, and if the seller's had another home to go to, they are just leaving their current homes to go back to the home that they previously rented out but still own.  This is not always the case; sometimes the family just moves in with other family members and leaves the home vacant.  But the basics are people are walking away from their homes.  The lender is being forced to take back the properties that they have liens on and then sell them fast to free up the non performing asset.  This drives prices down. 

The positive to the story is that individuals who have 5 to 10% to put down on homes right now are able to purchase an investment at a great price.  The negatives are a Retail Seller now has to compete with whole sale sellers.  If the retail seller did not put money down or took out their equity, to use on other investments, they have to bring money to closing or negotiate a short sale. 

I hope this clears up some questions about what is happening in today's market.  If you have any other questions about Real Estate, be it Buying, Selling, Financing, or Construction, just give me a call at 405-315-7965.  I am always here to help out.

Josh Barnett, Real Estate Investment Broker, Edmond, Oklahoma

This information is the sole opinion of Josh Barnet, and does not reflect any views or opinions of Realty 1 or companies that have partnerships with Realty 1 LLC or Edmond, Oklahoma.