A Short Summary of the Enid Market
A Personal Commentary by Brian Colby
August 2009 update
"Just the facts Jack!"
-Through 1 July 09, sales are down 35-40% for the year, compared to sales in 2008.
-Prices are still increasing in the mid and lower price ranges (implies supply/demand remain in favor of sellers).
-A lot fewer homes have come on the market for sale so far this year. Many folks taking a "wait and see" attitude this year before upgrading to larger, newer homes.
-Homes in the $80K to $120K as I have said for years now are still in high demand, and sell almost scarey fast.
-Upper-end home sales (over approx $250K) have slowed dramatically! Extended time on market for these properties before they sell. Some have been sitting over a year.
-Foreclosures in NW Enid are a non-issue, almost non-existent.
-Rentals on the NW side of town are even more in demand! People choosing to rent out their homes instead of selling them when they leave are getting whatever they want for rent (if the homes are nice).
My concerns are still the virtual shutdown of the oil/NG industry in western Oklahoma. We have seen some job losses with this, which have caused people to put there homes on the market this year, however Garfield county unemployment I believe still hovers around 4%, which is very low. As I type this the stock market (DJIA) passed 9200 today and the S&P passed 1000. Regardless, I am a medium/long term bear on the U.S. economy (next five years), but am still very bullish on the short and medium term (next ten years) for Enid. I believe Enid will buck the trend in the coming years to the troubles we will see financialy as a Nation due to so much debt, and with the coming rise in interest rates. Just so folks know where I stand, I only invest in real estate and cash, and have been doing this for the last six years. I don't own a single stock or mutual fund.
In short, my advice still has not changed to incoming military... if purchasing, stay below 220K max if only staying here for two to three years. Rentals are tough to find, and if you do find a nice one, expect it to only be on the market for a couple of days max, and expect to pay top dollar in rent. If you are an investor, look for homes in the $80K-$150K range to maximize cash flow.
February 2009 update
So here we are in February, and the U.S. economy is in free-fall. Unemployment is already up to 7.6%, up almost 2% percentage points in the last few months, the worst levels in many decades. People are taking over 20 weeks to find new employment when they lose their jobs, if they can even find a new job. Earning reports are horrid, companies are cutting costs and jobs at an alarming rate. Home values are plummeting and foreclosures are skyrocketing... The country is in survival mode... So how is Enid fairing? Ahhh the all important question, especially if you are moving or PCSing to Enid. Well here is what I can tell you.
Enid appreciation was up quite a bit for 2008, in someplaces in Enid, as much as 9%. All very neighborhood and price range specific however. What is very obvious is that homes in the $80,000-$160,000 range move quickly, and that homes over the mid $250K take quite a while to sell (nothing new here from me). You don't have to be a realtor to figure this one out, simply hit a few different neighborhoods and ask how long houses have been for sale on that street.
Enid January sales were down 11 million dollars from last year, and there were about half as many homes on the market as last January. The average days on the market has not changed much from 2008, just slightly over 100 days. The good news is that foreclosures in Northwest Enid are a non-issue.
What does it all mean? January is only one data point, so keep that in mind... it is also a slow time of year for real estate, so keep that in mind too. The fact that the "days on the market" has not changed much may simply mean there are just fewer homes on the market. Perhaps psycologically people are just decidng not to try and move this year with all the bad news going around. The Oklahoma's unemployment rate is quite low compared to the nation, I believe it is 4.5% (don't quote me). With folks keeping their jobs, no one is forced to move, hence forced to sell their home, and that is a good thing.
The number of calls for rental properties has skyrocketed in the last few months. There is a serious shortage of quality rentals. While this has always been the case since I have been here, with people scared to buy the situation is now even worse. My wife Courtney is doing some property management for higher end rentals, and nice homes are getting TOP dollar. 1%+ per month on the rent compared to value in most cases ($80K-$150K). Plus our own rental properties have yet to see a day of vacancy.
$40 oil and cheap natural gas still concerns me when it comes to Oklahoma and Enid, although I have not seen the job losses with that industry roll through town yet. You only have to look back at Enid's history in the 1980's to have some concern. However the trucking/shipping business continues to be solid in Enid which is a good sign (building materials are still in demand).
Many Enid business leaders though have told me they expect an economic slowdown over the next year or so. How big a slow down, thats the big question everyone wants the answer to.
Overall I remain bullish on the short and midterm Enid propsects... continue to seek reasonably priced housing in Enid if you are only staying for the short term (2-3 years). Stay under $220K for residences and $80K-150K for investments. Don't be surprised if you can not find a quality rental in Enid, as they are extremely hard to come by.
RE Investor note:
Credit is continuing to tighten in general, but especially for investors... There are new limits on investment properties with loans backed by our friend the U.S. Government (Freddie/Fannie). An investor used to be able to get ten investment properties with ten loans backed by Fannie/Freddie, now the limit is four! The limiting factor is loans not properties. As far as I know this does not affect "assumptions." Remember assumable loans are our friends, always! Also another sweet change (sarcasm), is in order for the rent on an investment property to count as income in qualifying for your next property purchase (primary residence or investment), you must now have at least 20% equity in the property for the income to count towards your debt to income ratio (DTI). Ya thats a great idea... as if how much you owe on a property has anything to do with the income stream... its the cost of the debt you measure, not the debt itself...you know that rule was written by some dumb***, government beauracrat who doesnt know squa-doosh about cash flow. The bottom line is this... as Courtney and I have already done, earlier in ones investor career, folks will need to go to private, local lenders, who are willing to portfolio loans, to get financing. Portfolio-ing a loan means the loans dont have to fit government guidelines, and are kept "in house" by the local lending institution... The government does not realize it is going to be the RE investors that eat up much of the extra supply in many of the depressed RE markets across the U.S. Some of these policies are simply knee-jerk reactions, which will cause more harm than good. Can we get a RE investor in office somewhere please...?
Fall/Winter 2008
What a difference six months can make... The phrase "Good Thing Your in Oklahoma" put out by the Realtors in the area is definitely looking to be the case. Enid is still doing well at the current time (1 Nov 08). However in my opinion, there are some concerns for the Enid market, specifically in regards to job loss. Obviously the gain or loss of jobs in a local economy can have a significant affect on the local housing market.
A lot of income for the state of Oklahoma is generated by the production of oil and natural gas. As many may have noticed these commodity prices have plumetted over the last couple months with the oncoming of a Global Recession (which I believe will be a two year event). The earlier "Boom" caused by the high oil/NG prices in Oklahoma obviously drove job creation and hence drove demand for living space in Enid. If prices for oil or NG descend low enough, companies in Oklahoma will decide it is too expensive to pump it out of the ground here, and close up shop. This would have far reaching fall-out to many other industries in Oklahoma and Enid.
Much depends where the prices for these commodities level off. Sure, everyone likes cheap gas, but too cheap may not be good for Oklahoma and Enid. After casually talking to a couple of "oil guys" in the local area, they mentioned $50 as kind of a "hope it stays above number," so hopefully (fingers crossed) we are near the bottom of the the fall in oil and natural gas. It is hard to say however, since who knows how countries like Russia, and Venezuela will handle the drop in oil prices. These countries depend on oil for much of their GDP, so who knows how their policies or actions may affect supply, and hence prices.
My advice for military folks, or those moving to Enid for a short period of time, has not changed from the summer, be weary of higher end homes, and think resale when buying. Lending is tight now and will be for quite a while, the days of no down payment, interest only loans, are gone (atleast for a while). This will further cut down on the number of people able to purchase homes. Always remember that the cheaper the home, the larger the bucket of people able to afford to buy your home when it is time to sell. This also leaves you the "rental" possibility in case we do see a big slowdown in the Enid Market. It is much easier to rent out a $150K home than a $300K home and not be taking it financially in the shorts every month. There are still very few rental homes, so good homes are getting premium rent, hence I still think your best purchase values are in the $100K to $200K price range if only residing in Enid for two or three years.
I am still very bullish on the long term prospects for Enid, just be careful in the short term, and make sure you are thinking resale when you buy!
Summer 2008
Enid is currently a strong sellers Market! This is due to strong demand from post BRAC job creation at Vance AFB, Advance Foods, booming business in the western Oklahoma oil fields, and job increases in the medical field. There is a shortage of quality housing for middle and upper middle income families. However even with this shortage, many folks moving to the area from other parts of the country will still find property values very reasonable on a comparative basis.
Rental properties (residential homes and even quality apartment units) for young military, or middle income families is virtually non-existent on the Northwest side of town. These properties that do come up for rent are getting top dollar and are renting in less than a week, and in some cases, less than a day (personal experience here).
Vance AFB has announced that hundreds more young officers who are awaiting pilot training will be arriving up to a year earlier than their pilot training start date. What this means is more military who will be here for mulitple years, more military now wanting to buy and even more wanting to rent. The demand is going to get even worse, and the supply can not keep up, let alone catch up.
While one would call the Enid RE market a sellers market, the demand is very neighborhood and price specific. I personally am only educated on the Northwest side/quadrant of Enid. I will limit my comments to this part of town. This is where most of your middle and upper middle income families, military officers, doctors, lawyers, etc reside. To be fair there are a few neighborhoods on the east side and south east side of town that a few middle and upper middle class families do call home. I am not extremely familiar with them, and therefore I will not say my comments apply to those neighborhoods.
Anything on the Northwest side of town in the area of $80,000 to to $150,0000 is selling rapidly (7-14 days in most cases). This is the price range that has the largest market in Enid (most possible buyers). Many folks can afford homes in this price range. This is the HOT market!
Homes up to approximately $220,000 are also selling rather quickly especially if they are four bedroom properties, with over 2000 sqft, and have two living areas . The demand on these is from new military families, and new professionals moving into the area. Many of these homes are sold in under 60 days.
However once you broach the low/mid 200's price range, properties no longer move quickly. In certain neighborhoods, there are homes, newer homes, that have been on the market for over a year in the 230K or greater price range.
In my personal opinion, there are a few neighborhoods on the Northwest side of town that are experiencing what I believe is a mini real estate "bubble." These are homes in the approximately $250K or greater price range (in certain neighborhoods). The number of folks who can afford such homes in this price range is already small. Once the macro economy turns for the better and long term interest rates climb just 1% (say from 5.8% to 6.8%, creating approximately an 18% increase in monthly payment), this could all but eliminate demand in this price range, except for the top income earners. (**Mid-August update... Interest rates are now locally at 6.5% for FHA/VA loans if you have excellent credit, and even higher rates for conventional loans... rates are on their way up... be aware of this in your home purchase planning... and yes it is having an affect on "days on market" for upper end homes.**) This does not even take into account current issues in the macro credit market, which depending on how long the current turmoil lasts, could make things even worse for those applying for credit. Even when the turmoil subsides bottom line is new standards in lending and larger down payment requirements are going to affect demand on more expensive homes. (**The troubles of Fannie Mae and Freddie Mac, while not a direct concern to the Enid market, are causing increases in loan closing costs and driving up interest rates... want to know why? See hyperlinked articles... Warren Buffet says Game is Over for Fannie and Freddie... and Fannie and Freddie Stocks Plummet.**) The good news is currently the Enid market, in the price ranges I discussed earlier, is still cruising along despite national economic headwinds.
Buyer beware in certain neighborhoods over approximately 250kish... This is not the price range you want to be in if you are a military family moving to Enid for a short stay of just two or three years, and are looking to sell a home quickly (and at a profit) when you leave. In short, you don't want to be the one without a chair when the music stops... and I think somebody is about to pull the plug on the juke box. That "somebody" being higher interest rates, and the simple income demograpghics of Enid. Remember the median income in all of Enid, is only about $30,000/year. Yes, that number would be much higher if you only looked at the Northwest part of town, but real estate is a numbers game, and when buying for the short term, you always want to own a home that has the most possible buyers... hence a property that has high desirability AND affordability.
On a personal note, most of my military friends who have bought a home, and are not investors or "real estate savy," are still walking away with 15-25K or more in their pockets after only three years of living in Enid. This is true as long as they bought in the right price range and neighborhood. Most of the Enid market is strong as long as you stick to investing in the $80,000-$150,000 price range or look to purchase a personal residence below or in the low 200s.
I have also heard investors discuss low income housing in the 30-40K price range as being very strong in Enid. I however have no experience in this price range.
So whats the bottom line...?
Enid is gowing, housing demand is expanding RAPIDLY, and supply can not keep up. There is already minimal rentals available. Investors look in the 80-150s for good long term investment properties, appealing to the middle class. If you are buying a personal residence in Enid, stay below the low 200s, idealy around 150K, unless you are buying for the longer term ofcourse, say greater than 5 years... If you are military buying for the short term, do your homework, pick the right neighborhood, and keep your home price below the low 200s and you should make out OK when you leave.
Best of luck on your home or investment property purchase! Let us know if we can help in any way!
Brian Colby
President/Founder/CEO of Enid Real Estate Investment Group, LLC
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These comments on this page simply represent the views and opinions of one investor, Brian Colby, and Brian Colby only!! They are based on my experience and knowledge of RE markets, my own RE investment strategy, and my four years of being in Enid and studying the market. As always, folks should do their own homework and verify all information presented.
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