Home Prices: It’s All About Supply and Demand
As we enter the summer months here in Oklahoma and work through the challenges associated with the current health crisis, along with our hot Oklahoma summers, many are wondering what impact the economic slowdown will have on home prices here in the Tulsa Metro area. Looking at the big picture, supply and demand will give us the clearest idea of what’s to come. (Side Note: The Tulsa Metro area encompasses all the surrounding areas of Tulsa. When I discuss the Tulsa Metro area I am focusing on Kiefer, Bixby, Jenks, Glenpool, Mounds, Sapulpa, and Tulsa).
Making our way through the month of June and entering the second half of the year, we face an undersupply of homes on the market. Keep in mind, this undersupply does vary by location and by price point, which is why if you are thinking about buying or selling your home in the Tulsa Metro area it is important to understand the market you are in. Always feel free to reach out to me and I will be glad to show you specifics on what is going on in your local housing market.
According to the National Association of Realtors (NAR), across the country, we currently have a 4.1 months supply of homes on the market. However, here in Tulsa County looking at the most recent home statistics from May 2020 we have a 2.98 months supply of inventory and in Creek County, we have a 3.93 months supply of homes on the market. Now, remember historically, 6 months of supply is considered a balanced market. Anything over 6 months is a buyer’s market, meaning prices could depreciate. Anything below 6 months is a seller’s market, where prices have the tendency to appreciate. The graph below shows inventory across the country since 2010 in months supply of homes for sale.
“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt. Estimates vary, but based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”
Given the undersupply of homes on the market today, there is upward pressure on prices. Looking at simple economics, when there is less of an item for sale and the demand is high, consumers are willing to pay more for that item. The undersupply is also prompting bidding wars, which can drive price points higher in the home sale process. According to a recent MarketWatch article:
“As buyers return to the market as the country rebounds from the pandemic, a limited inventory of homes for sale could fuel bidding wars and push prices higher.” We don’t necessarily see extensive “bidding wars” in the Tulsa Metro area, but we are seeing homes stay on the market for a day to less than a week with multiple offers. So that means you are competing against other buyers.
In addition, experts forecasting home prices have updated their projections given the impact of the pandemic. The major institutions expect home prices to appreciate through 2022. The chart below, updated as of earlier this week, notes these forecasts. As the year progresses, we may see these projections revised in a continued upward trend, given the lack of homes on the market. This could drive home prices even higher.
Many may think home prices will depreciate here in the Tulsa Metro area and across the United States due to the economic slowdown from the coronavirus, but experts disagree and we are not seeing that here in our Oklahoma market. As we approach the second half of this year, we may actually see home prices rise even higher given the lack of homes for sale.
If you have been thinking about buying or selling, but aren’t sure about timing with everything going on; I would have you consider it. For many people, it is an excellent time to buy and sell a home in Kiefer, Jenks, Tulsa, Bixby, Glenpool, Sapulpa, or Mounds. I would be glad to talk with you and discuss possible options. I am Sabrina Shaw with Homes by Sabrina brokered by eXp Realty. I believe everyone should love where they live and love helping to transform lives one home at a time.