If Lawton homebuyers are holding their breath for lower interest rates and tumbling prices, they may turn blue.
Lawton’s real estate market prices are expected to hold, though prices are starting to budge a little, local experts say. Last month the Federal Open Markets Committee, which sets the federal interest rate, did not budge from 5.5%, despite months of investors and economy experts' predictions that the FOMC would lower it as inflation has trended downward.
Hopes have turned to the committee’s meeting next month for a possible chink in the rate.
With more cash needed for down payments and higher insurance premiums, buyers are delaying purchases or asking for better prices, said Lawton Realtors Association President Chris Weaver.
When prices come down, that is an indication houses are sitting on the market longer, Weaver said.
“People are starting to do reductions and we’ve seen a trend that they’re not taking properties as is,” he said.
Most sellers are not experiencing bidding wars that were common during the COVID-19 pandemic era, Weaver said. With fewer homes on the market and the rising cost of new home construction, prices soared nationwide as demand remained steady at the time.
Last year’s hailstorm has also been biting down the sale price as buyers demand a new roof or repair if the owner did not take care of it at the time, Weaver said. Lawton experienced golf ball-sized hail and significant wind damage last June.
Potential homebuyers are also caught in a squeeze between a higher cash down payment due to the interest rate and insurance premiums ticking up, he said.
The Oklahoma Insurance Commission reported last fall that home insurance premiums were up between 10-30%. Oklahoma has the highest homeowner insurance rates in the country, nearly double the national average of $2,777, The Oklahoman reported.
Most of Lawton’s homebuyers are veterans, as many as 70% Weaver said, and that chunk of the market isn’t springing for higher prices and creeping insurance costs.
“Them being on a tight budget, it pushes that price point that could have been $200,000 back down to $150,000,” Weaver said.
The commercial real estate market is moving, with several new contracts in recent weeks, Weaver said.
Mark Scott, vice president of commercial lending for Arvest Bank, said he had not seen a slowdown for commercial real estate, and he is keeping an eye on the housing market.
Population growth has shrunk housing supply and increased home prices in some areas of the U.S. as new residents, often with more cash to spend, can pay more, Scott said.
“Texas is seeing a huge population boom and that has driven their prices continually higher,” Scott said.
According to the Robb Report, which tracks luxury housing trends, the influx of new residents since 2000 has escalated the market in the Lone Star state.
Oklahoma’s population has also ticked up. U.S. Census records show Oklahoma’s net population growth is in the top 10, having grown by more than 34,000 between 2022 and 2023, Oklahoma Council of Public Affairs reported.
Lawton's population declined from 96,867 in 2010 to 91,542 in 2020, but it remains unclear if the trend of remote workers relocating to cheaper housing markets could shift those numbers back up.
Workers who realized they didn’t need an office, and employers who closed them, left for a wide open housing market that is more competitive. The outcome of remote workers could change though, as employers have increasingly called employees back to the office, NBC reported last year.
“I think we’re starting to see that trickle up here,” Scott said of remote worker migration. “You’re starting to see a lot of folks move to this part of the country that can work remotely. They can buy something like a city block for what they’re able to sell their house for in California.”
Despite much of the market having less cash due to the interest rate, buyers with cash to burn will likely help keep the prices stable. Until inflation numbers are more promising, the market can only speculate about falling interest rates, he said.
The Federal Open Markets Committee’s next meeting is March 19 and 20. In December the Federal Reserve announced it hoped to cut the rate as low as 4.6% by the end of 2024, according to CNBC. The committee will have five more meetings throughout the year to consider those cuts.