Here's how a city in Oklahoma is luring Denver tech workers away

At least 65 Denverites have already left Colorado for the less expensive city in Oklahoma, ac

Tulsa, Oklahoma, is luring remote-working tech professionals away from Denver with perks including a yearlong $10,000 grant, free desk space in a communal office and a network of like-minded peers.

Tulsa Remote, founded in 2018, has lured over 1,600 remote workers to the second-largest city in Oklahoma. According to program organizers, 92 transplants have come from Colorado, with 65 of those from Denver specifically.

One of their taglines reads “Everyone thinks their city is special. Tulsans just know it.”

Some of the workers who left Colorado for Tulsa said the Covid-19 pandemic changed their minds about the state.

“During the pandemic, it's like OK, everything we love about Colorado, we're not able to do,” said Chantel Nguyen, an alum of Tulsa Remote. “I miss how pretty it is.”

Nguyen and her husband, Brandon Minor, lived in Colorado for six years prior to their pivot to Tulsa. While living in Boulder, they heard of Tulsa Remote from an acquaintance in San Francisco. Minor, a remote-work veteran who runs his own autonomous vehicle tech company, Tangram Robotics, was accepted into the program separately from his wife, giving them a $20,000 incentive to live in Tulsa for a year.

Program managers say 93% of Tulsa Remote workers stay beyond the one-year program, with Colorado movers making up 5.4% (or fourth most) of all program members. The average income of a Tulsa Remote program worker as of mid-2021 was slightly over $104,000.

These workers are realizing a very high quality of life is within reach of budgets, said Justin Harlan, Tulsa Remote’s managing director.

“[There's] definitely a much stronger sense of community and the ties to the city here,” Nguyen said. 

In what started as a 100% philanthropic business model, Tulsa Remote now reaps the benefits of recent Oklahoma state legislation, House Bill 2860, that is incentivizing remote-working organizations based on their workers' performance, basically reimbursing employee tax dollars back to the organization.

Tulsa Remote estimates a $13.77 return in new labor income per dollar spent on the remote workers' incentive, with $62 million in 2021 income for Tulsa County coming from the organization’s remote workers.

Remote work remains popular among employees, particularly in tech, even as lower Covid-19 case numbers are prompting employers to invite workers back to the office. But some experts say the ability to work from anywhere is encouraging movement away from more-expensive metro areas.

One of the reasons Denver is experiencing an exodus of professional workers is due to the rising cost of living.

The west south-central area of the U.S., which includes Tulsa as defined by the U.S. Bureau of Labor Statistics, isn't getting cheaper, either. All urban consumers in the area saw a Consumer Price Index increase of 9.5%, with food specifically jumping 9.3% compared to Denver’s 9.1% in the year ending March 2022, according to the BLS.

But the price of living is lower. A study from Zumper found Tulsa’s median one-bedroom rent was $950 compared to Denver’s $1,760 in May. The median sale price for Tulsa homes was $225,000 compared to Denver’s $632,788 in April, Redfin found.

Nguyen's and Minor’s first incentivized year in Tulsa renting a three-bedroom house for $900 a month went so well that they decided to stay when the one-year program grants expired. They bought a 1,600-square-foot house with three bedrooms and two bathrooms for $214,000 in August 2021.  

High costs are hardly chasing everyone away. In 2020, Colorado ranked No. 3 for high-tech employment concentration after being within the top four since 2000, according to the Metro Denver Economic Development Corporation.

Colorado also seeks to support remote workers through certificate programs sponsored by the state's Colorado Remote Work Initiative. Denver was ranked the No. 6 best U.S. city for remote work by Business Insider.

“Colorado is perfectly fine for remote work,” Minor said. “I think the infrastructure is certainly there for Colorado.” 

Tulsa isn’t the only city trying to attract Denver’s tech talent. Arkansas has its own advertising efforts planted in Denver through an initiative called "Finding NWA," which offers similar benefits and assistance to Tulsa's.

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How appraisers value homes in a hot housing market

Robin Sheridan, a real-estate broker with Compass Washington, recently listed a three-bedroom home in Seattle for $795,000. The 76-year-old brick home had what Sheridan considered a “funky layout,” with two rooms added to the back that didn’t quite integrate into the flow of the home. Still, they functioned well as office spaces.

Sheridan received 29 offers on the property, which went pending within five days – and sold for $1.013 million, or 27.4% over the list price.

As anyone involved in the residential real-estate market knows, bidding wars – and contract prices exceeding the list price – are the norm today in many markets around the nation.

Sheridan’s listing appraised at the contract price, and the deal went through without a hitch. But how do appraisers value a home in a market where prices are escalating rapidly – and where nearly two-thirds (64%) of listed homes faced bidding wars in March, according to Redfin, due to low mortgage rates and a severe shortage of homes for sale?

“The challenge is that the sales data you’re looking at is dated,” said Shawn Telford, chief appraiser at CoreLogic. “While the comparable sale might have closed three months prior to the appraisal, it went under contract before that, and market conditions five months ago were different than they are today. That’s where appraisers put on their thinking caps and dig in and do their research on how they might adjust the comparable sale they’ve selected to account for current market conditions.”

Indeed, time adjustments are a valuable tool that appraisers use to reflect changing prices in the local housing market. “They might look at the last three to six months of sales activity – or longer – in a defined market and try to extrapolate what the trend is,” Telford said. “If home prices increased month over month by 1%, they can use that pattern to support an upward adjustment to the comparable to accurately reflect what the subject property might be doing.”

Even in the best of times, there is an inherent lag in the system because often, counties are backlogged and slow to record deeds. So, appraisers often use MLS data, rather than deed records, as the data tends to be fresher.

According to GSE guidelines, Fannie Mae and Freddie Mac require a minimum of three comparable sales as part of the sales comparison approach. Appraisers may submit more than three comparable sales, including pending sales or current listings, to determine the housing market trends in the neighborhood and to justify their opinion of market value – and they must include an explanation of their conclusions in the appraisal report.

“It’s more important than ever in this market to utilize your writing skills,” said Warren B. Boizot III, president of BLG Appraisal Group in Denver. “Remember that the end reader of your appraisal report – the underwriter – is not in your market, so you have to explain what’s going on. It’s crucial because if I just throw three comps in there and don’t tell them what’s going on in a crazy housing market, the appraisal is not going to fly.”

Boizot routinely interviews listing agents to get more information surrounding the sale, such as how many showings there were and how many offers came in. “If there were five other people willing to pay the contract price, then that goes to show it’s not just a pie-in-the-sky number,” he said. “That’s all good information that I’ll include in the report.”

One recent example: Boizot appraised a 2,400-square-foot home on the outskirts of downtown Denver. About 65 years old, the home was listed for $370,000. It spent four days on the market, had 202 showings and received 56 offers, 55 of which were at or above list price. The home ultimately sold for $477,000, or $107,000 over the asking price. Although the appraisal came in at just $431,000 – well-supported by the data, Boizot said – the deal closed.

“Realtors believe it is the job of the appraiser to get to that crazy number, but it’s not,” he said. “I’m there to give a non-biased, third-party opinion on what I think the home is worth based on my expertise and knowledge. Sometimes that crazy number is reachable, but sometimes it’s not there and it’s not my job as an appraiser to get there.”

Other tools used by appraisers in housing markets where closed sales may not be the most accurate indicator of value due to rapidly-rising prices include pending sales and listings. Pending sales are not public knowledge, and brokers often will not release a sales price until the deal closes. But they might indicate if the property sold for above the listing price.

This is where being a local appraiser matters. “If you’re immersed in a local market – you’re not driving all over the state – then you pick up data through your own experience,” said Jonathan Miller, president and CEO of Miller Samuel, an appraisal firm in New York City. “It’s not just getting the price. In this current frenzy, you need to know the story behind the sale.”

For example, if a property came on the housing market and sold within 48 hours with five backup offers, it’s a good assumption that it sold for at least the list price, he said.

Miller echoed Boizot’s sentiments about the role of the appraiser, particularly in a frothy housing market.

“The appraisal gap as a catchphrase is a bit dangerous,” he said. “The default assumption is that the appraiser is wrong, as opposed to being a neutral market benchmark on what’s going on. When we get into these frenzied periods, appraisers are the only party who don’t have skin in the game, but they become the focus of attack. It shouldn’t be on them as much as it is.”

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These were March’s hottest housing markets

Largest price increases in the US were in Austin, Texas; Fresno, California

In modern history, the housing market has never seen a month like March. Record demand and the lowest levels of inventory on record pushed sales prices to record highs in March and made life very complicated for buyers, real estate agents, builders and lenders across the United States.

The national median home-sale price hit a record high of $353,000 in March — up 17% from 2020 — according to a new report from Redfin. Active listings — the count of all homes that were for sale at any time during the month — fell 29% year-over-year to their lowest level on record. This was the largest year-over-year drop on record, and the 20th straight month of declines.

Prospective homebuyers, real estate agents and homebuilders have felt the effects of low inventory for months now. The high cost of building materials has crippled general contractors and new-build progress, and hundreds of thousands of homeowners who ordinarily would have listed their homes, have stayed put.

Combined with the normal frenzy that a spring buying season brings, the demand for existing homes has never been higher.

The housing market set several other records in March, including the amount of time it took a home to sell (25 days on average, a new low, and 19 days faster year-over-year), the amount of homes sold above asking price (42%, a new high), and the average sale-to-list ratio, which measures how close homes are selling to their asking prices (over 100% for the first time ever).

In spite of the crazed demand, officials don’t believe all homes are being overvalued.

“Despite the intense competition and high prices we face, I still see more big gains to be made in home equity,” said Taylor Marr, Redfin lead economist. “Fundamentals like low mortgage rates and high demand for housing are fueling the record-high price gains, so I don’t believe that homes are overvalued. Waiting for the market to cool could take many months, and at that point we may have missed out on the opportunity to benefit from these super-low mortgage rates and price gains in the year ahead.”

Median sale prices increased year-over-year nearly across the board in local housing markets. The only places prices didn’t increase were Honolulu, where they fell 4.7%, and San Francisco, where they were down 1.6%, per Redfin. The largest price increases were in Austin, Texas (+28%), Fresno, California (+23%) and North Port, Florida (+23%).

The largest gains in sales were in New York (+58%), San Jose, California (+56%) and San Francisco (+55%). The metro areas where home sales fell the most were Rochester, New York (-9%), Grand Rapids, Michigan (-9%) and Dayton, Ohio (-7%).

Other secondary housing markets that have seen a boom in new and existing homebuyers are Portland, Maine, Pueblo, Colorado, Logan, Utah, and Bay City, Michigan.

Interestingly, four California cities – San Francisco (+34%), San Jose (+20%), Oakland (+8%), and Los Angeles (+3%) – all posted a year-over-year increase in the number of seasonally-adjusted active listings of homes for sale. This follows a trend that began in early 2020, as people continue to move out of crowded, expensive cities (especially in California) and into smaller, secondary cities that offer more square footage at reasonable prices.

The biggest year-over-year declines in active housing supply in March were in Salt Lake City, Utah (-66%), Baton Rouge, Louisiana (-59%) and Allentown, Pennsylvania (-52%).

Denver was the most aggressive market, with half of all homes listed as “pending sale” in just five days, down from nine days a year earlier. Tacoma, Washington and Grand Rapids, Michigan were the next fastest markets with five and six median days, respectively, on the market, followed by Omaha, Nebraska (six) and Portland, Oregon (six).

(Housing Wire)

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Buyers are paying to bridge the appraisal gap

Remember the good old days, when single-family home buyers would offer appraisal gap coverage to make sure they were making the best offer? Now, they’re including it just to get noticed, according to multiple agents from brokerages across the country.

Single-family home sellers are regularly getting multiple — and sometimes dozens — of offers in markets nationwide, and transactions are closing at record speeds. In some places, buyers are being given 15 minutes to walk through, if they get inside the home at all, and often less than 24 hours to write and submit a competitive offer. 

And “competitive” in today’s low-inventory, high-demand market has taken on a whole new meaning, with homes regularly selling for thousands over list price, and buyers who need to secure financing going up against all-cash investors. With all this money flying around, sellers are accepting sky-high offers from overeager buyers who find they’re at risk of falling into the appraisal gap.

What is the appraisal gap?

Writing coverage of the appraisal gap — the difference between the offer and the appraised amount the bank will lend on — into a sales contract isn’t a new negotiation tactic for a hot market like the one we’re in. But agents across the country report it’s become increasingly common in the last several months.

“I make sure my buyers [really understand that] it’s going to turn into a bloodbath,” said Alison Malkin, who’s head broker and owner of RE/MAX Essentia and is licensed in Connecticut, Massachusetts and Florida. “I ask them up front if they have to buy right now, because it’s going to be an arduous process. You’re going to be frustrated, and you’re going to spend 20% more than you wanted to.”

Malkin recently listed one client’s home for $210,000 and was immediately bombarded with 22 offers, topping out at $280,000. Her sellers chose one at $239,000, and the lucky buyers had to come up with an “extra” $29,000 to cover the appraisal gap. 

Creative, yet risky, ventures

Here’s where buyers need an agent who knows the area, the market and how to get creative: For another recently closed sale, Malkin’s buyer clients found a particular home that fit their specific and urgent needs, so Malkin reached out to the seller’s agent, who she’d worked with for many years, and found out what the sellers had to have. In this case, the home needed some work, and Malkin’s buyers were willing to do the manual labor before signing a sales contract — essentially improving someone else’s property with no solid promise the deal would go through (it did).  

Preparing buyers to come immediately with their highest-and-best offer and be ready to back up their offer with actual cash (or sweat equity, as it were) is essential right now, Malkin said. As is making sure buyers understand that appraisal gap cash is essentially gone. She said she’s been asked several times by buyers when they can expect equity gains in their purchased home to make up the difference in what they paid the sellers. “I tell them no one knows, and they need to decide if getting this house is worth it to them.” 

Eli Tene, managing director of CENTURY 21 Peak Corporate Network in Woodland Hills, Calif., agrees with Malkin that agents need to make sure their buyer clients know exactly what they’re signing up to pay for, and are only offering what they can truly afford.

“Appraisals aren’t an exact science, and they’re not always fast enough to catch up with the market value … the price someone is willing to pay for a property,” Tene said. “The appraisal process can’t calculate the emotional value of homeownership, nor the current appreciation in value.”

Tene is referring to the appraisal gap that occurs when home values increase faster than the comps can keep up, which is another issue that’s complicating transactions for both buyers and sellers. Malkin said appraisal values, and therefore comparable sales, in her area are “catching up” to market values, but “buyers keep offering even higher than that,” which will likely continue while demand outpaces inventory at such remarkable rates.

Buyers right now have a few options in the Denver, Colo.-area, market, said Angelica Olmsted, an agent with RE/MAX Professionals Cherry Creek: They can come with cash and bid (appropriately) high, look at “less-desirable” properties — condos with no outdoor space, for example — or look at new builds. Olmsted said the Denver-area buyers’ market is especially cutthroat for single-family homes listed at $650,000 and below, and says she’s consistently telling her clients to be ready to pay 10 to 15% more than list price, and to have that cash on hand to cover the appraisal gap.

Pick up the phone

“What buyers’ agents need to be doing right now is picking up the phone and calling sellers’ agents instead of just relying on comps,” Olmsted said. “Appraisal gaps can be confusing. I have clients repeat back to me exactly what they’re agreeing to do to make sure they understand.”

Managing buyer expectations, researching the most recent area comps and helping clients “be 75 to 80% sure” they want a house before they even walk through the door is how Laura D’Ardenne, broker/co-owner of RE/MAX of Cherry Creek in Denver is keeping her buyers’ best interests in mind while meeting them where they’re at.

“It really depends on the type of buyer and where they’re coming from,” D’Ardenne said. “Have they been saving for years and years and this is really cutting into their budget? Or, are they recent sellers taking advantage of a large gain? I don’t make any assumptions about the financial position a client is in, and just give them up front the reality of the market.” 

And the reality is that some buyers are going extreme routes to get the money they need to outbid the hordes of other buyers and cover a sometimes-gaping appraisal gap.

“I don’t want my clients to be overpaying,” D’Ardenne said. “But that’s where we are.” 

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Is Buying a House in a Good School District Still Top Priority in a Virtual Learning World?

Living in a good school district is one of the biggest factors for homebuyers, even if they’re empty nesters.

The National Association of Realtors found in its Profile of Home Buyers and Sellers in 2019 that 26% of all homebuyers said the quality of schools was important when finding a new home. And typically, a better school district equals higher resale value.

NAR also revealed that just over half of homebuyers with kids move based on school districts alone.

Now, specific school districts as a driver of home-buying could be a thing of a past.

Nick Solis, broker and owner of One90 Realty in the Bay Area of California, told HousingWire that he’s seeing more homeowners with kids seeking homes with bigger spaces, without counting the value of the school district that might put them in.

“Typically, [homebuying] is driven through the seasonality,” Solis said. “In fact, a lot of people are even in a situation where they’re trying to get out of the East Bay into other areas, they’re just not worried about school because it’s all distance learning. It’s a really interesting paradigm because they don’t have that timing.”

In the middle of spring, COVID-19 caused schools across the country to shut down and go virtual. In a shift that feels similar to the way many people are reconsidering how close they need to be to a physical workplace, many parents are questioning how close kids need to live to their school if classes are going to be some version of online for the foreseeable future.

“In 100% of the transactions last year, every single house, whether they were 20-somethings and they want to start a family, or they were 60-somethings and [their] kids are long grown, schools came up in every single transaction,” Solis said. “Not every single conversation, obviously, but you know, within every transaction. It always came up [and] they’re not coming up at all anymore. Like, zero. People aren’t even talking about schools.”

Hudson Santana, founder of Santana Properties in Cambridge, Massachusetts, said that his clients have been gravitating to suburbs with yards and more space, also not generally thinking about the schools and district zoning.

“We’ve seen lots of people move to suburbs and giving up Cambridge in order to go to a place where they have a big yard, where they have a home office and be able to compromise more with the school,” Santana said.

Santana said that when it comes to how much home resale values will be affected by school districts in the future, it’s hard to tell since COVID-19 is so recent.

“In Massachusetts, in general, the public schools are really good schools, but we’re definitely seeing a huge trend of buyers moving and really looking at focusing on space, [whereas] before they were really focused on school districts,” Santana said.

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