New figures from the federal government show continued slight home price appreciation across the nation on average — a surprise to many observers — and continued price increases in Oklahoma City, not much of a surprise to local Realtors and builders.
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The Office of Federal Housing Enterprise Oversight's national House Price Index was 0.5 percent higher in the first quarter than in the fourth quarter of 2006. The figure, based on home sales and refinancings, was less than the revised growth estimate of 1.3 percent from the third to the fourth quarter of 2006.
Prices in the first quarter of this year were 4.3 percent higher than they were in the same quarter in 2006.
Local builders and Realtors were less surprised by the finding of continued appreciation in the Oklahoma City metro area market.
Oklahoma City-area prices were up 1.8 percent in the first quarter compared with the third quarter of 2006, and up 5.4 percent compared with the first quarter of 2006.
Tulsa-area prices increased 2.8 percent in the first quarter compared with the third quarter of 2006, and increased 5.25 percent compared with the first quarter of 2006.
Across Oklahoma, the average price of a home, new or used, sold by a Realtor in the first quarter was $116,998, an increase of 7.8 percent compared with first quarter of 2006, according to the Oklahoma Association of Realtors.
Across the nation, seven states showed home price depreciation in the first quarter, seven states showed appreciation of less than 2 percent, but seven states maintained double-digit home price increases, said James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight. The splintering of trends led to the lowest increase in the index in 10 years, he said.
"Oklahoma is not following the trend around the country of low sales and depreciation. It looks like a great 2007 so far,” said Dennis Nevius of Edmond, president of the Oklahoma Association of Realtors.
The national increase, although slight, contradicts the expectations of most Realtors, said Mike Cassidy, chairman of the Multiple Listing Service of the Oklahoma City Metro Association of Realtors.
Earlier this month, at the National Association of Realtors' midyear meeting, Cassidy said, "They were predicting a decrease in all regions. In the past, they targeted certain regions. But they were saying all regions. So that's good news.”
Oklahoma City-area prices were expected to be flat, he said. The slight increases quarter to quarter and year to year, though small, are significant in light of the mood of the market, Cassidy said.
"We didn't go through such a large increase, so we didn't have to have such an adjustment,” said Victoria Caldwell, president of the Metro Association of Realtors.
Price cuts limited to niche
Home sellers, however, have been making concessions and dropping prices in Oklahoma City this spring, Cassidy said.
Cassidy said he sold a home recently that originally listed for $120,000, which was dropped to $117,000, with the seller paying closing costs of $3,500.
In another transaction, a seller wanted $250,000 for a house, but soon dropped the list price to $240,000, then sold it for $236,000, he said.
Most of the pressure on sellers is coming from an increased number of houses on the market, about 2,000 more than at this time last year, he said. The increased inventory gives buyers more choices and negotiating leverage, he said.
"Some builders have gotten very aggressive on their pricing, too,” Cassidy said.
But only in certain price ranges are builders actually cutting prices, said Caleb McCaleb, president of the Central Oklahoma Home Builders Association.
Houses priced at $300,000 and below and about $1 million and up are still selling fairly briskly, he said
The only glut in houses locally, he said, is in those priced between $400,000 and $800,000. Many have been on the market for a year or more.
"In our business, we call it having a house birthday when one sits for a year,” McCaleb said. A "birthday party” is when a builder offers extra concessions or even cuts his price to get a house sold.
"You've got to discount to get rid of those birthday houses,” he said. "People are probably thinking, ‘Why would builders build all those houses (priced from $400,000 to $800,000)?' Most of our executive transferees are in that price range. We haven't seen as many transferees lately.”
