OKLAHOMA CITY – It’s a seller’s market for property owners.
Housing vacancy rates — both for homeowner and rental housing — are at or near historic lows, the U.S. Census Bureau’s recently released Housing Vacancy Survey indicates.
Vacancy rates for rental housing are lower than at any point during the 35-year period from 1985 until the start of the COVID-19 pandemic in early 2020. The vacancy rate for homeowner housing is lower than at any point from 1980 until early 2020.
The homeowner vacancy rate in the first quarter of 2022 was 0.8%.
This was the first time in the 66-year history of the HVS that the homeowner vacancy rate has been as low as 0.8%. Although not statistically different from previous lows of 0.9% (which occurred prior to 1980 and in 2020-2021 during the pandemic), it is lower than at any point during the 40-year period from 1980 until the start of the COVID-19 pandemic in early 2020.
Prior to the pandemic, the quarterly homeowner vacancy rate estimate dipped to 0.9% only seven times (1978, 1973, 1972, 1971, 1957, and 1956).
The rental vacancy rate in the first quarter of 2022 was 5.8% — higher than the historical low of 5.0% recorded prior to 1985. However, it was lower than the quarterly rental vacancy rate estimate at any point during the 35-year period from 1985 through 2019.
Oklahoma City-area real estate agents note that investors, local and out-of-state alike, have turned to single-family homes. They did so to make money, either by renting or by flipping.
Just last week one Southwest Ledger staff writer who lives in northwest OKC received an unsolicited offer from a representative with The Huntley Co. Holdings of Walnut Creek, California.
“We are looking to buy more homes in this area and would like to make you a cash offer on your place,” an individual named Jimmy wrote in his solicitation letter. “I strive to remove every headache from the process by:
purchasing in cash.
paying ALL of your title fees (closing costs).
assisting with any issues associated with selling property (probate, title issues, help with moving, etc.).
licensed real estate agent who facilitates the entire transaction.
We use legitimate Oklahoma state sales contracts from the Oklahoma Real Estate Commission.
No commissions are charged to the seller.
We ALWAYS buy AS IS, regardless of condition. Unwanted items may be left behind; we will buy properties with problem and non-paying tenants.
Another Ledger staff writer who also lives in northwest OKC received a similar offer:
“My name is Mike and I’m with a small group of Real Estate Investors who buy homes in Oklahoma City,” the email message related. “While doing our research, we’ve identified your home as one that we’d potentially like to make a cash offer on. We’ve done an analysis on your home’s potential value, and you can view our cash offer HERE. It never hurts to see what your home might be worth and there’s absolutely no obligation on your end.”
The homeowner vacancy rate during the first quarter of this year was 0.5% in Oklahoma City and 0.6% in Tulsa, the Housing Vacancy Survey study showed. The rental vacancy rate in Q1 of 2022 was 8.7% in OKC and 6.2% in Tulsa.
Southwest Oklahoma’s current availability of affordable homes for rent and purchase is “stressed,” Lawton Realtor Brenda Spencer Ragland reported recently.
The number of three- and four-bedroom homes for rent is “very limited,” and the ability to find homes for purchase under $250,000 is also limited, she wrote. “Often, when an offer is made on a home for purchase, the offer is competing with multiple additional offers.”
Within the rental market, a waiting list is maintained. The largest demand for rentals is for three-bedroom, two-bathroom homes, with a garage, Spencer Ragland said. When a three-bedroom home comes available for rent, there are often multiple applications, she said.
“Some suggest the demand growth results from the lower interest rate for those desiring to purchase; others indicate that COVID-19 impacted the market. Additionally, while more individuals and employers opted for virtual work, many found the need for more space and a desire to rent or purchase a larger home.” Regardless, the challenge realized in the market for both buying and renting is “very tight,” she said.
Foreclosure recovery
The most current vacancy rate estimates reflect tightening housing market conditions over the decade from 2009 to 2019, as the nation recovered from the foreclosure crisis.
The homeowner vacancy rate declined to 1.4% in the fourth quarter of 2019, and the rental vacancy rate dropped to 6.4% in the last quarter of 2019, just before the COVID-19 pandemic hit the United States.
Housing availability declined further as households adjusted to the changes prompted by the pandemic.
Comparing the most current vacancy rate estimates to the period just prior to the COVID-19 pandemic shows just how tight the housing market has become during the pandemic.
The homeowner vacancy rate declined 0.6 percentage points between the fourth quarter of 2019 and the first quarter of 2022, from 1.4% to 0.8%. The rental vacancy rate also declined 0.6 percentage points during the same period, from 6.4% to 5.8%.
Taken together, the homeowner and rental vacancy rate estimates for the first quarter of 2022 indicate that housing availability was extremely low by historical standards.
It’s not clear what happens next. The housing market is adapting to rising mortgage interest rates and there is still uncertainty about economic conditions and the next phase of the pandemic.