It sounds a little crazy to say you are bullish on real estate anywhere in the United States. The stock market is continuing to go down, the American auto industry is on the brink, and the foreclosure rate is still continuing to rise. America is in for a hard fight to get out of this recession, but improvements could be coming next year. Obama looks like he is bringing in the best and the brightest, Detroit will get their money but with reforming strings attached, and public works spending will help employment. Oklahoma is not following the downward trend of much of the country, and I would like to show some sunshine peaking through the dark clouds. Here are my reasons to be bullish.
Gas Prices
Gas in Oklahoma has gone down in Oklahoma from $4 a gallon to $1.70. It is estimated that in short order nationally this will result in A $225 Billion dollar savings. this is the equivalent to a massive tax cut. With more money in peoples pockets there is more money to spend. Some of it will go into savings but that is good to. If financial institutions get your business, they have that money to loan. This is bigger that the stimulus package that Bush initiated.
Interest Rates
Rates dropped today on the ten year note to 3.01%. One week ago it rose to 3.93%. Let's use a $160K home mortgage and see the effects of lower rates. If we take this loan and lower the fixed rate to 5.75% from 6.5%, we lower our payment around $77 per month. Using the cost per thousand of a 30 year mortgage of $6 then that is the equivalent of approximately $12,800. That means that I just got a discount of $12,800, or because of the lower interest rates, I now have $12,800 in buying power. We all go by the monthly PITI payment, so that is the economic value of lower rates.
Inventory and Foreclosures
Oklahoma City still shows a sellers market below $200K overall. Edmond, Oklahoma, the most affluent suburb shows 6 months of inventory on the market from $150K to 200K, and 3 months inventory below $150K. This is a condition for prices rising. A discount in an over inventoried market doesn't help you becasue that with foreclosures will put tremendous pressure downward on pricing. You want a market that is rising to protect your largest investment. On foreclosures, Oklahoma City has only 6% of all listed homes as foreclosed property on the market. In areas of Arizona, Florida, California, and Nevada, it has run as high as 65%. In those markets the scary thought is that you don't know what the bottom is. Chances are in may be 2010 or 2011 before the bad inventory works itself out of the system.
Oklahoma Economics
The larger Oklahoma cities like Oklahoma City is sitting on 3.7% unemployment which is dramatically below the national average. Federal government statistics show that Oklahoma is leading the country in the rise of the average and median price, and the economy is stable and not dependent on manufacturing like the Rust Belt and Midwest. Plus, having strong industries in energy and agriculture creates strength. Although prices are down on energy most Oklahomans are grateful. Can you imagine the current U.S. economy with high gas prices. The prices will rise again, but hopefully when we have recovered, and Oklahoma will benefit greatly. The push for 25% biofuels by 2025 will create 160,000 jobs and billions of dollars in revenue. Oklahoma is growing and if you look to a long term purchase you want the economic prospects to be bright. The time to buy is now. To get set up on an auto-email notification of property listings in real time, go to www.homesearchbyemail.com, fill in the information with your guidelines, and we will get you started.
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