While hard to believe, we are entering the second quarter of 2023. We faced unprecedented economic uncertainty just three years ago with the onset of the coronavirus pandemic. While much-needed economic stability was the hope of many, the future of the real estate market at large and the impacts of the pandemic continue to keep us agile and alert. 

As the Fed consecutively raises rates in an attempt to tame rising inflation and with the recent banking uncertainty, worries of a similar 2008 housing market crisis leave some people wondering, “What can we expect of the current housing market?”

Amidst the newness and fear of the pandemic, we saw a dramatic shift toward the seller’s market. The market saw a steady upward price momentum driven by a historically low inventory and exceedingly high demand in response to interest rates near an all-time low. Consequently, brokers began to expect multiple competitive offers, completely booked showing schedules, and cash offers to purchase properties sight unseen. 

The seller’s market circus was officially in town, and buyers exhausted from the competitive market seemed to be on the verge of offering up their firstborn children to secure a chance to be in the running. In fact, according to the National Association of Realtors (NAR), the rate of home appreciation from August 2021 to August 2022 was an impressive 7.7%.

Even though we barely had time to get our footing, things are trending in the opposite direction as the Oklahoma market begins to experience another significant shift and shows signs of cooling off. Homes are staying on the market longer as buyers struggle to find affordable housing because of rising inflation and 20-year high mortgage rates hovering near 7%. 

Homes are staying on the market longer as buyers struggle to find affordable housing.

Fears of a market crash are on the minds of many, and in September 2022, NAR reported that the number of homes sold dropped by 20.4%. The rate of existing home sales has fallen to its lowest level in 10 years. The supply of homes remains historically low; the inventory of unsold existing homes stands near three months’ supply, where six months is considered a balanced market.

You may ask, “What does the rest of 2023 have in store for the housing market?” NAR Chief Economist and Senior Vice President of Research Lawrence Yun predicts that “Mortgage rates will continue to rise in 2023, but within two years, rates should dip back down to 5.5% or 6%.” 

Many sellers today will be left waiting for the market to turn around, although motivated sellers will likely move to sell and increase the monthly supply. 

Our local housing market is less likely to see demand drop as much as other states. Low median home values may insulate Oklahoma from some of the pressures caused by higher mortgage interest rates and the nation’s slowing economy. 

Recent market data shows that states with lower average home prices than the national average are becoming more affordable and have higher sales per capita. In Oklahoma, data reflected 2,608 homes sold for a ratio of 64.8 sales per 100,000 population.

Finally, the nation is likely to fare better than years past, thanks in part to the stronger personal balance sheets of homeowners today. A typical mortgage borrower has excellent credit, substantial equity, and a fixed-rate mortgage. As a result, no foreclosure crisis is on the immediate horizon, and the return of a balanced market is still being determined as we move forward.