2022: What to Look Out for in the Oklahoma New Homes Market
January acts as a bridge between the last year and the new year, where lingering patterns from the past year hang on for a few more weeks. As we move past January and enter the main body of 2022, our eyes look toward the possibilities of the new year.
However, it is still essential to take a look back, as well. While we may want to leave 2021 behind, the last year can pass on valuable trends and information that will help set the new trends which will define the new home construction industry in Oklahoma in 2022.
Expecting Population Increase
This particular point should bear no surprise to the thoughtful watcher of the Oklahoma housing market and population trends. For the last few years now, Oklahoma has been a popular place for families to relocate to.
This is in large part because of the active and affordable real estate market across the state. This market can be great for families looking for affordable homes that fit multiple generations in one house. This market is also great for investors looking for rental properties to fill their portfolios.
According to the US Census Bureau, most people migrating from other states come from Texas, Colorado, and Arkansas. Though many other states have thousands of people leaving to move into Oklahoma each year.
Supply and New Demand
New people and families coming to Oklahoma is always great news. Each of these new people brings opportunity with them, and if they aren’t when they first move, they will eventually be looking for new homes to settle down in.
The Journal Record reported that in response to this increased demand, over 6,000 new homes were beginning construction, the highest number of new home construction projects since 2013. There are plenty of new homes being made to absorb and accept this new increase in demand.
Last Year’s Sales
When you’re looking for forecast 2022 home sales numbers, looking back on the previous year’s patterns can help you take the best perspective going forward.
Sales Up
At the beginning of 2021, there was an unexpected up in new home sales. This is an interesting highlight, as around this time, many other housing markets were facing worrying troubles in the face of problematic pandemic conditions. In Oklahoma, the demand for new homes was so high that NewsOn6 looked into the low home supply issues that prompted the increase in new home builds.
Overall, in early 2021, they reported, demand for both new homes and existing homes was high. And the new build projects were so numerous that there were waitlists of people waiting to buy their custom new build. Along with that, most homes were facing very competitive buyers, with several offers often coming higher than the property’s listed value.
Unexpected Summer Slump and Beyond
Sales did not remain at record highs for the entirety of 2021, however. By June, before the usual sales slump that comes with winter, the sales increase we’d been experiencing slowed significantly. Overall, the fall was 6.6%, a seasonally adjusted average rate, according to the US Department of Housing and Urban Development.
In part, this is likely because of supply chain issues that were common across the nation in June. As numerous building materials, especially lumber, became increasingly expensive and difficult to source.
Looking directly to Redfin for more prompt housing market data, overall, the number of homes sold by the end of the year was down at -3.6%. However, the median days on the market were down to 8 days, which is -13 under the year over year average.
This may suggest that the pace of home buying increased by the end of the year. Or that home supply was lower and resulted in increased demand, despite fewer homes being sold than average during this time of year. Both of these circumstances are great indicators for sellers.
Expected Difficulties
In 2021, some difficulties hit the real estate market that could repeat in 2022.
Building Material Costs
In 2021, the cost of various building materials increased significantly.
According to the Bureau of Labor Statistics, the overall price of goods needed to create new homes and buildings rose approximately 19.4% by mid-year. While these issues don’t solely affect the Oklahoma new home construction market, this increase will have lasting effects on housing prices and availability as it becomes more difficult to pay for and source building materials.
Lumber
Overall, the biggest concern to look out for over the next year is lumber availability and prices. As the Oklahoma Home Builders Association reports, lumber prices have skyrocketed to 75% higher than they were before the pandemic hit. This astonishing price increase will likely remain high as truckers in both Canada and America begin a protest, and general trading between Canada and the US becomes difficult.
Uncertain Home Selling Confidence
With the sudden decrease in sales during the end of 2021, there has been some worry about a slowdown in the Oklahoma housing market. Will Gattenby, who is the Director of Communications for the Oklahoma Association of Realtors, did an interview with Public Radio Tulsa on his thoughts about the upcoming year.
He comments that there is a lack of new home supplies across the state, particularly in cities like Tulsa. In the urban centers, the supply shortage is notably worse and only approximately two months’ worth of properties stand ready for the market. This usually indicates a strong sellers’ market.
He isn’t prepared to say that the market may be facing a bubble, only that, “We were already in a seller’s market and had low inventory before the pandemic. Now the demand is up ticking to make it look like it’s even more of a seller’s market. I don’t know if we’re in a bubble. Time will tell.”
And overall, he expects that there should be a strong sellers’ market for the first three quarters of the year before sales slow.
Looking Forward to the Next Year
As we take a look at the major trends of last year, we can look ahead and see that there is much to look forward to in the real estate market in 2022. It’s best to look optimistically at the first half of the year, especially if you’re a home seller.
Overall Housing Value Increase
Mainly, the thing most homeowners are looking forward to is the increased home prices that have come to Oklahoma as the demand for homes has been growing steadily. Looking at Zillow data, the typical home price over the last year has risen 15.5%.
The lack of inventory will also drive more competition between buyers and likely lead to prices rising again in 2022, following a 3-year trend.
While this may not seem like a great time for buyers, think again. Home prices in Oklahoma are still incredibly affordable, especially when compared to other places in the country.
Understanding the Coming Market
Truly, the circumstances of the coming year are somewhat uncertain, as they are every year. Unexpected disasters, increases in prices, slowed migration, and other factors no one can predict may crop up. These unique yearly circumstances can, and will, influence the events of the coming year.
The only way to prepare your assets and investments is by arming yourself with as much knowledge as possible. That way, you always have the information you need to maneuver your way through the market to make the best decision for you, your business, and your family.
Sources:
https://www.okhba.org/biden-joins-the-lumber-trade-wars
https://www.bls.gov/news.release/ppi.nr0.htm
https://www.okhba.org/new-home-sales-fall-in-june-as-supply-chain-challenges-remain
https://journalrecord.com/2021/02/25/housing-starts-on-the-rise-expected-to-continue-growth-trend/
https://www.zillow.com/ok/home-values/
https://www.census.gov/quickfacts/OK
https://www.redfin.com/city/14237/OK/Oklahoma-City/housing-market