This housing market is CRAZY, but what's driving it?

While attending the International Builders’ Show 2022 in Orlando, Florida, Steve Shoemaker, President of Ideal Homes & Neighborhoods, and Vernon McKown, CEO of Ideal Homes & Neighborhoods were looking at new trends in housing and spending a lot of time listening to economists.

It’s has been interesting learning all the reasons and causes behind increasing housing demand, supply strains, rise in interest rates, and much more. Economists are predicting that the next two years in the housing market will look very similar to 2021, due to the significantly low inventory of homes available on the market both nation-wide and within Oklahoma. 

Ali Wolfe, chief economist with Zonda, says millennials are buying homes slightly later in life, so there is a big wave of millennials still expected to be big drivers in the home-buying industry. They have a much higher education level compared to the previous two generations, which increases their income levels and therefore home-buying power. 

Inventory continues to be an issue as it is at an all-time low. Homebuilders are selling homes before they are even completed. Historically in the United States, one in every ten homes purchased is a brand-new home. Now, it’s one out of every three homes. This will continue to drive the home building industry through 2023 due to demand even though interest rates will continue to rise.

There’s good news, though, for homebuyers in Oklahoma. Oklahoma City ranks third in the country for the supply of affordable homes for sale where the median renter can afford more than 70% of homes in our market. OKC also ranks fifth in the country for the median rent compared to monthly homeownership costs (meaning renting vs. owning is comparable).

One interesting source of down payment savings over the past year is due to student loans being deferred during Covid. On average, every two years of deferred payment is equal to a six percent down payment. 

The great news is the economy is strong and continues to rebound from the pandemic. The next couple of years are looking good for the home building industry.