- The worst pandemic in a century is having what some might consider a surprising effect on the home real estate market.

Existing home sales are up in recent months, according to the national association of realtors.

Why, because of the lowest mortgage rates ever recorded, coupled with a shift in how people use their homes, low interest rates below 3% are the number one reason for the uptick in purchases with the secondary demand coming from the work at home phenomenon that has people looking for bigger homes.

Since March many people have come to see their homes as not just where they live, but also where they work and where their children learn.

At the national level housing inventory is down forcing prices up, the national median home price increased 15% year over year to $320,000.

In Texas sales were up 3.1% year to date compared with activity during the first eight months of 2019.

Housing inventory is low in Texas forcing price growth, rising demand, and higher home prices at the national and state levels made us curious about local markets.

So tonight we ask is this a good time to buy?

I'm Becky Ferguson and this is One Question.

(upbeat music) Is this a good time to buy?

That's this week's question.

This evening, we will visit with experts in the housing markets of both Midland and Odessa.

They'll tell us about local housing inventories and prices, and we'll also hear from our mortgage banker about historically low interest rates.

First this evening, we have Midland Broker, Bill Lanier a third generation realtor of Keller Williams Realty in Midland.

Welcome Bill.

- Well, thank you, Becky.

- Thank you so much for coming to visit with us about this.

And let me just cut right to the chase.

Is this a good time to buy?

Right now the Midland market's just a phenomenally good time for a buyer to go out and buy a home.

We've been so under supplied with inventory for the last few years.

We've got about 775 houses on the market currently compared to two to 300 a couple of years ago.

So it's a great time just by the sheer numbers where they have an opportunity to go out and look around and buy something.

And then interest rates are phenomenally low as they're basing it on the national news, where we're seeing interest rates down around two and a half percent and just historic lows.

It's a great opportunity for home buyers right now.

- What are some of the things that are affecting our local market now?

- COVID had an effect on with this back during March and April, and then it seems like it, the markets opened up May whenever summer was coming around.

That's our typical peak season and things really picked up through the summer.

And it's a matter of fact, we had the record highest monthly average sales price in Midland during July.

So it's been a good market, where everybody thinks it should be just a dismal market out there right now.

It's been a good market.

- That's so interesting.

A minute ago you talked a little bit about housing inventory.

How is it distributed across the price ranges?

- Yes.

The inventory has increased a little bit over all the price segments but most especially between two and $400,000 which was one of those markets that's been so under supplied for the last few years, it was good to have some extra inventory in that market.

- Is there a particular price range that is more popular right now than others?

- And that's been one of the interesting aspects of this slow down as far as the oil and gas industry goes.

Our upper price range, the price you would think would be slowing down, it's just continued to go extremely well.

And when I say that about $500,000.

- It's a popular price range?

- Yes.

- That's so interesting.

You mentioned that we have an excess of 700 houses on the market now versus 400 a year ago.

What is considered a healthy inventory?

- The experts say a six months supply of homes available for sale is a balanced market.

- Balanced market.

- Yes.

And we're running about four months worth of inventory right now.

So theoretically we're in a sellers market but at 775 houses on the market, I'm telling everybody it's probably the high end of a balanced market leaning a little bit more towards a buyer's market at this point.

- Can you talk about the average home price here in Midland versus the national average home price?

- Yes.

And there's one other interesting part of this.

When I said July we had a record average sales price for the month.

Our average sales price is right around 400, excuse me, $345,000.

And the average sales price last year was within a thousand dollars or a couple thousand dollars of that.

So we've remained very constant from last year to this year and considering all the turmoil in the energy sector, I'm calling that a home run and more importantly, compared to the national average, the national average is around $330,000.

- So we're still a little bit higher than the national average.

Are home staying on the market longer?

- We are seeing a little bit more marketing time, last year, for the last two years we've seen low from 30 days of marketing time from time of house went on the market to under contract, this year we're seeing about 45 days on the market.

So we've seen a little bit of increase, which goes with the extra inventory, but it's not anything significant.

It still a very healthy days on market.

- One of the things I know that's affecting our market besides oil and gas prices is COVID.

And can you talk a little bit about how that has affected you whether it be showing houses or the inventory or the price or people's willingness to buy?

- Yes.

We did see a drastic slowdown back in March and April like I said, that was, we did see a lot less activity.

We did still have activity, people that needed to buy and sell a home, they were still out there in the marketplace.

Since then it's picked up, we've started using mask.

There's been especially certain people that are immune compromised.

We're having mask sit out at the front door, hand sanitizer.

We're trying to work as well as we can with our clients whichever side it might be on, but it's typically the sellers are the ones a little bit concerned about people coming through their house.

So we're being very mindful of that and working with their wishes.

One of the things that I've read about happening on a national level is folks are interested in buying in more remote areas, as opposed to in congested cities.

Some folks are interested in buying larger homes, if they're in a 400 square foot apartment in New York and having to work there and teach their children there, it has spurred sort of interest in larger homes.

Are you seeing anything like that here?

- Yes.

A lot of our clients, let me just back up to March back when COVID hit everybody was trying to figure out where to put money, who would have thought lake houses, mountain homes, and that type of stuff would be a good place to put money to survive a slowdown.

And that's what we've seen a lot of our clients here in Midland going to the lakes or to the mountain to Colorado or someplace buying their second home.

And so we're seeing a lot of our activity in Midland right now is transition homes moving up down whichever, somebody in that situation, lot of people going out and buying these second homes, maybe downsizing a little bit here in Midland living more at their remote home or their second home now.

- Are you seeing very many first time home buyers?

- We are.

Back to that two to 400,000 range being the one that's had the most inventory increase, below $200,000, we have seen very little impact there, but that's the market that has really been under supplied for the last few years.

So I think that has a lot to do with that portion of it.

And there's just been a lot of pent up demand and we still have not caught up on that price range, which is typically the first time home buyer, 300 or less and really in Midland 200 and less would be even better for a first time home buyer.

- A minute ago, you talked about I think you called it a balanced market but I'm gonna try to make you weigh in on whether or not this is a buyer's market or a seller's market.

- It's in the middle.

I wanna weight it towards a buyer's market to some degree, we're having more negotiating than what we've had for the last few years with such an under-supplied market of inventory.

We've not had a, sorry, try that one again.

We have not had the supply out there for people to go and buy homes.

So with this extra inventory it sure has helped on that side.

- What advice would you give to buyers?

- Buyers, the first thing a buyer needs to do is go into a good reputable lender, get pre-qualified that just makes the home buying process so much more streamlined and get with a good realtor.

- Thank you Bill.

So much information, we really appreciate your coming and sharing your expertise with us today.

And coming up, we're going to look at the mortgage banking industry.

(upbeat music) Teri Pearce with Sims & Guess Realtors of Odessa has been in the real estate business in West Texas for more than 35 years, more than 30 of those in Odessa.

Thank you so much for joining us, Teri.

- I'm glad to be here.

- We're just gonna get right to the point.

Is this a good time to buy?

- Yes, ma'am, thank you for having me.

It is most certainly a terrific time to buy, all stops barred, it is the perfect time for someone to buy and own their own home.

- What are some of the factors that are affecting our current market?

- Well, largely the Permian Basin we have oil and gas energy, of course and that is the most predominant in my opinion that's affecting our market but then we also have the virus that has hit and the virus has changed our market as well.

- In what way?

- Well, with oil and gas, we've had a lot of people moving in, moving out.

We've seen a mass Exodus in our area and that includes all the way from Hobbs to Midland.

So it's a little bit even extended past the Permian Basin.

Now the virus has affected us completely in a different fashion and across Texas the virus has been more predominant than the energy industry.

- Right.

Can you talk about inventory.

How many houses are on the market in Odessa right now versus this time a year ago?

- Well, right now we have an inventory of approximately in Odessa, gosh, we have 45.2% higher active listings in the Odessa market.

We've had just a slight increase from this time last year.

- So the 45% is, is higher than what, when?

- This time last year, it is.

Yeah, and so we're up to slightly and that's just because the industry, the energy industry really did decline and hit us hard in August of last year.

- And how are the price ranges distributed across the inventory?

Do you have more houses in a particular price range?

- We do.

We seem to see a great deal of homes in the 234 is a median price range and it-- - $234,000?

- Yes, that's correct, yes, 234,000 and to 400.

- What is considered a healthy inventory?

I mean, can you tell us approximately how many houses are on the market right now and whether or not you think that's a healthy inventory?

- Yes, I can.

So right now a healthy inventory is approximately four months.

Anything more than that is over-saturation and it's not so good to have more than four months inventory.

Now in 2019 in January, we had maybe one month of inventory which is very low and it drives the industry.

It's a supply and demand and it just drives the industry.

- Are houses staying on the market longer now than they were at this time a year ago?

- They are.

We have homes that are sitting on the market just a little bit longer at a rate of, sorry.

- You're fine.

- 42 days on the market.

Whereas before they were approximately five to 10 days.

- You talked a minute ago about the effects of COVID.

One of the things that I have read about what's happening on the national scene and also in other parts of Texas is that folks are interested in buying larger homes because now they're officing in their homes and maybe their children are also learning in their homes.

Have you noticed that in Odessa?

I have seen that, I've seen that more across the State of Texas than I have specifically Odessa but people are needing more square footage.

Their kids are at home, they're working from their home, they're doing home improvements.

They're making changes to their home that have been long overdue because they are spending so much more time.

- So when you're home, you sort of notice the things that need to get done.

Has it been more difficult showing houses in times of COVID?

I mean, have you had to change the way you did that back in the spring, as opposed to now?

- I have, we have adopted within the Odessa board of realtors where we do mask up, we do social distance.

We did not have open houses for a large period of time until we had a little more knowledge of what was happening with the virus.

Now that has laxed a little bit and we have opened up a few homes for open houses because we do have a larger inventory.

And we do have sellers that need to sell their home.

- A minute ago, you were talking about supply and demand.

Would you characterize the market in Odessa as a buyers market or a seller's market?

- It is hugely a buyer's market.

There has just never been such a good time to buy.

And when you say a buyers market what does that mean, for people that aren't in real estate?

- Right, well, that means that conditions are very favorable to buying with in the interest rates are very, I mean they're historically low.

And so you can afford a little more house than before.

And also the rates have stabilized.

The process have stabilized.

There's not such a competitive market.

So it's a win-win for all buyers.

- How would you characterize the buyers that you're seeing, are they first time home buyers?

Are they folks that want a bigger house, folks that want a smaller house?

- I see a variety of people that I would say we have a lot of first time home buyers.

A lot of people that have stepped back from buying and hesitated in buying that are renters that are now seeing an opportunity to go ahead and move forward and that they actually can be homeowners.

- What advice would you give to someone who is thinking about buying now?

- I would say that they need to run with it.

They need to move forward.

They need to jump on it quickly.

We do not know how long this is gonna last.

And, I have even family members that I am urging, let's get something and buy it.

Get while the getting's good.

- That's exactly right.

- Teri, thank you so much for coming and sharing with us your expertise on the housing market in Odessa.

Up next, we're going to learn more about historically low interest rates.

(upbeat music) Welcome, Matt Dunnam.

He's a Loan Consultant at HNB Mortgage.

Welcome Matt.

Thank you so much for joining us.

- Thanks for having me.

- I'm gonna start off with the question of the day which is, is this a good time to buy?

- Sure, I think from an interest rate perspective, it certainly is.

I know there's some questions in the oil market right now but from a rate perspective, yes, it's a great time to buy.

- Because interest rates are historically low, am I right?

- They are.

We've seen them trending downward for the past year.

And I think certainly.

- In the two to three range, correct?

- Yes ma'am.

Yep, absolutely.

- And that is dependent upon, like what kind of loan you get, what are some of the other factors that go into whether or not you get like a low two or a high 2% interest rate?

- Sure, so a lot of factors go into interest rates, the loan program, the-- - And when you say loan program, what are you talking about?

- Sure, you've got your conventional loan, your FHA loan, your VA loan.

And there's also a non-agency loan called the jumbo loan, that's for high balance loans.

But so you have your loan term, your loan program.

You have your loan term which is 30 year, 15 year, credit scoring and also your equity in the house.

- I know the rates are historically low.

I remember back in the eighties the interest rates were like in the 17% range and they had been trending down mostly since then.

Can you give us just sort of a ballpark?

Let's say I'm buying a $200,000 house and a year or so ago, the interest rates were 5% and now they're between two and 3%.

What kind of monthly savings are we talking about?

- Sure, oh, well, I know when we bought our first house in 2010, our interest rate was five and we were happy to see that.

Now they're on a 30 year conventional loan, there about half.

So on a $200,000 sales price, your monthly savings would be about $300 a month compared to what they were in 2010.

- Yeah, that's not nothing.

What kind of down payment is required?

- Sure, so again, depending on loan program, for a first time home buyer, you can get in for as low as 3% on the conventional program, for non first-time home buyer you can get in with 5% and on the FHA loan you can get in three and a half percent.

There's also a VA loan, which is for veterans.

And you don't have to put anything down, if you're a qualified for the VA loan.

- That's amazing.

A minute ago I think you made reference to a jumbo loan.

What is that?

- So the standard conventional loan tops out at a $510,400, the standard conventional loan tops out at 510,400 that's amount financed.

So if you're going to have a loan higher than $510,400 you would have a jumbo loan.

And it's pretty much the same as the conventional loan except for typically requires a 20% down payment and has a little bit higher interest rate.

- What kind of volume are you seeing people coming in to get loans?

- Sure, well, this year volume is up a lot from last year and that's predominantly due to the refinance volume.

We're still seeing a fair amount of purchases as well but with rates as low as they are we're picking up a lot of refinances.

- What factors go into deciding whether or not it's a good idea to refinance?

- Sure, so a good rule of thumb is that if you can save about a percent from your current interest rate, a refinance would be worth looking into.

Ideally the more you owe the less you would have to save as far as percentage, if you can save 1% on a $200,000 loan that would be about the same as saving three quarters of a percent on a $400,000 loan.

So the more you owe the less you have to save but right now we're seeing people save four or five, $600 a month sometimes just by refinancing.

- And then you have to, I guess consider your closing costs and the pay out on that.

How do you figure that?

- Typically we roll in closing costs.

We don't have to, but we certainly can.

And we would like to see your monthly savings offset your closing costs within 24 months.

So if your closing costs are $3,000 that you roll in and you save $300 a month, then you would offset those closing costs in 10 months.

- What are size loans are you seeing mostly?

- Sure, I mean, we get them all over the board and certainly we can finance anything between 50,000 to 2 million.

But right now we're seeing in the three to 310 range is right around our median loan amount but we certainly see them all over place.

- All over the place.

How should buyers go about qualifying?

- Sure, so our mantra around the office is qualified before you buy.

So typically if you're gonna start looking your realtor or whomever you're looking with, we'll like to see that you're qualified to buy the house you're looking at and to do that you would just need to fill out an application.

You can send in your supporting docs as well but certainly talk to your lender before you do anything else, that way you know where your limits are, and you can get an idea on payments and things like that as well.

- I believe you told me that there is sort of a percentage of your monthly income that you look at figuring out the top of your loan.

Tell us about that.

- So your total debts, including your new house payment can be up to 45% of your gross monthly income.

There's a little bit of wiggle room in that depending on some other factors credit score and down payment and things like that.

But the rule of thumb is your total debts with the house payment can be 45% of your gross monthly income.

- How much do you advise folks to put down as a down payment?

- So down payment really depends on what your goals are.

If your goal is to pay off your house as soon as possible, certainly put as much down as you can.

If you put less than 20% down, you're gonna have private mortgage insurance.

You've probably referred to that as, heard it referred to as PMI, which that's no big deal.

It's a nominal fee, but if you put 25% or more down I'm sorry, 20% or more down, you will not have PMI.

But if your goal is to maybe, let me go back, about every $20,000 you change your loan amount only changes your monthly payment about a hundred dollars a month.

So if you can take that money and put it in another investment that same $20,000 and earn $250 a month, that's offsetting your opportunity cost of your mortgage because that same $20,000 in your mortgage is only saving you a hundred dollars a month.

But if your goal is to pay off your loan as soon as possible put as much down as you can and pay additional principal.

But if there's not a huge incentive to do so with rates as low as they are.

- Thank you, Matt.

There's a lot to think about there.

I appreciate you so much for coming and sharing your expertise.

And coming up next, Art Matters.

(upbeat music) Our painting this evening is entitled Vienna One by Belgian artists Joseph Anjanay 1921 to 1993.

He was one of the first abstract artists to emerge in post-war Holland in Belgium.

It's oil on masonite and can be seen at Baker Shore Fine Art Gallery here in Midland.

So is this a good time to buy in the Basin?

Interest rates are at historic lows, inventories are up.

So there was more from which to choose and prices are down a bit, the market at the moment, somewhat favors buyers.

And finally, thank you for watching One Question.

We'll be back each Monday at 5:00 following Basin Life with Krista Escamilla where we will answer the questions you want to know from the people who know.

If you have a question, send it to us at OneQuestion@basinpbs.org.

Next week, can we safely gather for Thanksgiving?

Coming up on Basin PBS, BBC World News America, with Katty Kay followed by PBS News Hour.

I'm Becky Ferguson.

Good night.