Real Estate

The devaluation of oil and Oklahoma Housing market

A buyer asked me if I thought the price of housing would drop drastically since the price of oil has dropped drastically over  the past year or two. Oklahoma is an oil state and it does affect our economy.

The following is my response.

In the 1980’s, the Oklahoma economy was predominately dictated by what happened in the oil industry. Because of this, when the oil bust came people left Oklahoma in mass groves. The real estate market collapsed because of the exodus. Today, Oklahoma is vastly diversified its economy.  Oklahoma City is home to businesses like Dell, Boeing, paycom, Hobby Lobby, the FAA and Tinker AFB.   While the cost of oil does affect our economy it does not rule it like it did in the 1980’s.

Oklahoma with stood the real estate down turn in 2007 and lost very little in value. Depending on the size and cost of the property as well as the location we saw values remain constant without any appreciation to a few percentage points of devaluation. We never saw the real estate bubble that California did; therefore, we never had the extreme bust either. We did have our share of foreclosures and short sales but that was to be expected.

Today we are seeing moderate increases in value. We did close fewer sales in 2015 than in 2014. In Cleveland county, we sold 4098 homes in 2014 compared to 3996 homes in 2015—less than a 100 fewer homes sold. While the average sales price rose from $175.88K to $180.17K. Fewer homes were offered for sale last year which caused the prices to go up in my opinion. With less inventory we saw prices rise.

What will the next few years bring for Oklahoma?

If oil prices do not rise, I think you will find that people who may have moved will choose to not move–to remain in their current homes until the oil market corrects itself.  If fewer people move, this will cause a continued shortage of inventory thereby holding or increasing property prices.

In my professional opinion I believe we will continue to see growth in our city as employers move to the Midwest seeking lower wages and lower taxes. Regardless of what happens with oil, people are not going to be moving from Oklahoma in mass droves like we saw in the 1980s. More people coming to the state will cause housing to rise especially rents. Rents tend to go up when population fluctuates upward because there is a shortage in housing available. Currently rents are generally more than the cost of a mortgage in a majority of areas.

I also believe the government intends to continue to increase the prime rate (the rate banks are charged) which will cause the interest rates for home loans to go up. The increase in the interest rate can cost a lot more than a slight depreciation in the sales price of a house. If the interest rate increases by only 1%, it will change your principle and interest payment by 10%.

While I do not have a crystal ball, I do not believe that the devaluation of oil is going to cause the prices of homes in Oklahoma to largely fluctuate negatively—due to the fact that we have low unemployment, low cost of living, and new businesses moving into our state.

Real Estate

I know you love that painting, but will the buyer?

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Staging a house for sale can make a huge difference in how  quickly a home gets sold.

While the homeowner may love certain pieces of art or sports trophies as in the pictures seen here, it could distract a buyer who may not be able to imagine their furniture and décor.   The current  art or furnishings can be obtrusive to a new buyer who does not share your same taste. The same could be said for sports trophies. While I understand that the seller may be excited to show off the buck or marlin, it could turn some buyers off.

I remember the day I showed a certain house. We walked upstairs to the bonus room and turned on a light. I thought the light switch went to the ceiling fan/light.  It actually turned on a staging light onto a large full size taxidermied elk  behind a pane of glass. My clients were not impressed and wanted nothing more to do with the house,  even though it was a wonderful home with a nice layout.  The elk would be leaving with the current owners but the image was burned into the buyers minds and they just couldn’t see past it.

I typically tell sellers that less is more. They should declutter as much as possible, remove personal photographs and any art that could be considered offensive to another person. Let’s face it, as a seller you are moving and are going to need to box your stuff up eventually anyways, so you might as well go ahead and do it now.

After you remove paintings or family photos, you may need to touch up the wall from where the wall hangers or nails were.  A fresh coat of paint will clean the room and make it more inviting.  An inviting home is one that sell’s fast and lets you move on to your next home.

If you have real estate questions or are looking to buy or sell a home, please contact me at 405-213-2992 or visit my website.  http://www.sandiwalker.net

Real Estate

Don’t lose all your investment profits to taxes

Investment property is a great way to build wealth. The investor can write of off many expenses and depreciate the value of the property on their taxes over the years. While making a profit from the rental income, they also are able to obtain a tax benefit from the investment. Over time an investor may decide to exchange a property with a high equity position perhaps a free and clear property to a larger property or to multiple properties that provide additional cash flow. The investor may want to diversify into other geographical areas of the country.
When an investor sells their property they are liable to pay several taxes. These include capital gain taxes to both federal and state, recapture tax on the depreciation, as well as the ACA tax of 3.8% if the investors taxable income in over the designated amount. ($200,000 for a single person and $250,000 for a married person at the time of this writing). This can add up fast and take up to approximately 50% of the profit to pay these taxes. For this reason, people sometimes think twice about trading properties. But there is a way to trade properties without paying the taxes.
Since 1921, savvy investors and real estate professionals have been taking advantage of a powerful tax strategy created by IRC section 1031-the deferred exchange. IRC Section 1031 (a)(1) states:
“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-king which is to be held for productive use in a trade or business or for investment.”
By using a 1031 exchange an investor can defer the tax burden. This allows them to keep more money to invest in other like-kind exchanges. While this does not eliminate the tax burden, it does defer it. And it can be deferred into a passive trust or a vacation rental when the investor decides not to be as involved in managing investment properties.
The investor will need to work with a “Qualified Intermediary” to facilitate the transaction. And it will need to be stated in the contract that the sale is subject to a 1031 exchange. This is just a simple introduction to 1031 exchanges. If you have additional questions, regarding time lines and other benefits please ask. As always it is recommended that the investor discuss a 1031 tax deferred exchange with tax and legal advisors.
If you or someone you know is looking to buy, sell, or invest in real estate please have them call me at 405-213-2992 or visit my website at http://www.sandiwalker.com

Uncategorized

What does fair housing have to do with it?

People often ask me if this is a good neighborhood or a bad neighborhood. They will state that they want their children to be in a good school, what parent wouldn’t want their child in a good school. Sometimes clients will ask the ethnicity of an area or if the schools in the area are good. They will ask about crime in the area including whether there are any sexual predators living in the area.

Realtors cannot answer these questions due to fair housing laws. Under the Federal Housing Act of 1968, this would be considered steering- Attempting to steer someone into purchasing a home in a particular neighborhood or to steer them away from another neighborhood.

What is a good neighborhood versus a bad neighborhood will differ from person to person. What feels safe to one person may not feel safe to another person.  I always suggest that clients drive the area that they are interested in at night and during the day as well as during the week and on the weekends. In addition, I think they should get out and walk the neighborhood, if you are physically capable of doing so, maybe even talk to a neighbor or two. If you don’t feel comfortable walking the neighborhood, you probably aren’t going to feel comfortable sleeping there at night.  There are websites that will give crime data. Buyers may also wish to ask at the police department for crime statistics in neighborhoods they are interested.

A Realtor cannot state that one school is better than another school, because that is an opinion.  They can say that a certain school is the deaf education school in a certain district, or that a certain school won the last state championship in football, because these are facts. The best way a buyer can determine if a school is perfect is the view the school in person and check out websites.

While I understand buyer’s concerns about the location of the property they are purchasing, I am 100% completely committed to fair housing and equal opportunity for all. I cannot answer subjective questions, because there isn’t a right answer to those questions. My impression of what is safe or good will be different from someone else’s.  I cannot answer questions on ethnicity of a neighborhood, because that might steer someone from feeling welcome in that area.  The answer to these questions is subjective and requires the buyer’s due diligence.

If you are looking for help in buying, selling or investing in real estate, please feel free to contact me at 405-213-2992 or visit my website at www.sandiwalker.com

Real Estate

Paint is cheap

Sprucing up the paint in your house with a nurtral color can help it to sell faster and for more money. 

Owner occupant buyers looking for homes generally fall into two catagories–those wanting a a deal and are willing to paint, carpet, and make some repairs and those wanting a move in ready home.  Most sellers want the maximum value for their home but also want to outlay the minimum cost, which is understandable. Generally, the buyers looking for a move in ready home are willing to pay a little more than those willing to do some repairs and updating.

In order to get the maximum value for the house, it should be clean and decluttered. Freshly painted homes look cleaner and fresher. In addition, sellers will want to take personal pictures off their walls and minimize the number of art work on the wall. In doing so, sellers need to pull nails and picture hangers, putty the holes, and touch up the paint as needed. If it has been awhile since the walls were painted the touch up paint will most likely not match. You don’t want the wall to look spotchy. So go ahead and paint the wall.

Wild colors of paint can make buyers cringe thinking of the number of coats of paint it is going to take to cover the purple or red rooms. In addition, white walls show all types of dirt and imperfections that otherwise might not be seen. White walls are also cold and feel like you are in a rent house.  I suggest that sellers paint a taupe or beige color. This way it is nuetral for the next buyer and yet makes the room warm and inviting.

A gallon of paint is about $25 and is well worth buying if you are trying to sell your house.  For other tips and questions, please feel free to contact me at 405-213-229 or visit my websit www.sandiwalker.net.