News Column

Oklahoma City area home sales, construction slow this year

May 31, 2014

By Richard Mize, The Oklahoman, Oklahoma City



May 31--Homebuilding and sales are down from this time last year and prices stumbled into spring -- but Realtors and builders aren't blaming the market alone.

"What I've been seeing is we have a much more normal cycle than we have had in a number of years. At the beginning of summer, sometimes we see a little dip," said Nels Petersen, president of the Oklahoma City Metro Association of Realtors.

Sales

Home sales involving Realtors -- excluding those sold directly by owners or builders -- fell 4.07 percent last month compared with April 2013, to 1,698, according to the Realtors.

Pending sales, however, rose 20.57 percent, to 2,321.

It's a "frustrating market" because of lending standards tightened in the wake of the national housing crash -- six years ago now -- and other difficulties in financing, said Petersen, owner of RE/MAX Preferred Properties in northwest Oklahoma City and RE/MAX Associates in Edmond.

Critics point out that minimum credit scores for loans backed by the Federal Housing Administration and Veterans Affairs are higher now than before the financial crisis and recession -- and higher than should be expected considering the still-struggling national economy. Post-bust regulations limiting access to credit in general have cost the economy up to 1.2 million "missing loans" per year since the crisis, according to a study by the Urban Institute.

Prices here slipped from March to April, but were up year to year, the Realtors reported.

The average price in April was $172,856 -- down 0.7 percent from the month before, but up 3.5 percent from April 2013.

The median price was $145,000 -- down 2.2 percent from March, but up 1.9 percent from April last year.

Nonetheless, Petersen said cash buyers -- local down-sizers with equity, newcomers from higher-priced markets who bring equity, and local and out-of-state investors -- are creating multiple-offer deals.

Difficulties aside, Petersen said, "If you've got a marketable home, and it's priced right, it's moving."

Construction

Even with rebuilding in Moore from the May 2013 tornado, construction in the metro area is slower so far this year than in the first four months of last year, according to figures from the Central Oklahoma Home Builders Association. The number of building permits issued through April was up only in Moore -- 105 percent, 201 permits so far this year, compared with 98 through April last year.

Permits were down 7 percent in Oklahoma City, 32.4 percent in Midwest City, 31.7 percent in Edmond and 8.4 percent in Norman, for a combined decrease of 4.5 percent, the builders reported.

However, homebuilders reported brisk traffic and good sales off of the second annual Parade of Homes Spring Festival in early May. Builders are not dealing with reduced demand, but with a shortage of ready-to-build lots, said developer Mark Livingston, vice president of the builders group and owner of Development Services LLC.

"That's not to say there aren't some areas and some price points that aren't slower," he said, but a bottleneck in municipal planning departments is a bigger issue.

Livingston said he had about 250 lots "in the pipeline" -- under review -- by Oklahoma City. Ideal Homes of Norman has a similar number, he said. Developer and builders have cited lack of buildable lots as a problem for months.

It is taking time to work out of the construction slowdown, which bottomed out here in 2009, he said. For several months afterward, land development came to a standstill.

"Builders and bankers pulled in their horns in 2008-2009," Livingston said, and infrastructure work has been slow to regain a pace to match demand from buyers and builders partly because municipal resources were redirected during the downturn, especially in Oklahoma City. "The city's got to get up to speed," he said, in working with developers on supplying portable water and sanitary sewer systems, waste-water lift stations in areas where the lay of the land won't allow gravity alone to move sewage adequately.

Otherwise, Livingston said, citing the strong energy sector, surging health care services and other growth in the local economy, "all the ingredients are here" for Oklahoma City housing to boom.

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Source: Daily Oklahoman (Oklahoma City)


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