Oklahoma City homebuilders are doing the time warp again.
The time slip is a bit of a mind trip: It's 2002 all over again in Oklahoma City, Edmond, Midwest City, Moore and Norman, at least collectively.
Combined, the cities issued 1,945 single-family building permits through May, comparable to the 1,940 permits issued through May 2002, which was the beginning of the buildup to the boom. Now, with the bottom of the bust, at least locally, three years in the past, builders are building up again.
“We thought demand was high last year, but in hindsight, it was only a ramp up to what we're seeing now,” said Oklahoma City builder Jeff Click, vice president/treasurer of the Oklahoma State Home Builders Association.
Builders here returned to speculative building — that is, building houses without buyers lined up — just this year. Click, though, said he hasn't had time to build houses without buyers because he's so busy building houses under contract.
“I'm going on 15 years as a builder and I don't believe we've ever been this busy,” he said. “For the first time in six years, I've actually had to watch my credit line and seek more construction funding with my bank, which fortunately they've provided given that nearly every one of our new starts is sold.
“Spec? I almost forgot I had that word in my vocabulary. Aside from our Parade (of Homes) home, we don't have time for specs right now. Demand is too strong with our custom homes, we have zero completed inventory, and are having to wedge time in our build schedule to get a few specs started.”
Demand is on the rise, Click said, despite the increasing difficulty in getting home loans underwritten.
“It has definitely become harder to get homes closed these days. It's not so much the lenders as it is the underwriters' requirements and attention to every detail. They're really dotting their i's and crossing their t's even more than they have in the past, he said.
The increase in homebuilding is not uniform across the five cities, according to statistics compiled by the Central Oklahoma Home Builders Association.
Two cities issued significantly more permits through May compared with the first five months of 2011: Oklahoma City, 1,398 permits, up 37.9 percent; and Edmond, 246 permits, up 78.3 percent. Permits were down in two cities: Moore, with 92 permits, down 16.4 percent; and Norman, with 164 permits, down 6.3 percent. Midwest City was flat with 45 permits.
Click, who builds where northwest Oklahoma City meets Edmond, said demand has him extending his turnaround time.
“We've generally always quoted our build time as six months or less from start to finish. Due to the number of projects we have going and the level of detail we're building these out for clients, we're now quoting nine-to-10-month completions from the time we go under contract,” he said.
Supply holds steady
Meanwhile, Realtors keep doing their part to keep the inventory absorbed. May ended with 7,748 homes for sale on the Multiple Listing Service and 1,785 sold for the month, according to the Oklahoma City Metro Association of Realtors.
Using the average number of monthly sales for the past month, 1,401, as a gauge, that means May ended with a 5.5-month supply of houses on the market. The inventory estimate, which does not include houses sold directly by owners or builders and not involving Realtors, has been at either 5.4, 5.5 or 5.6 months all year.
Lorna Koeninger, president of the Oklahoma City Metro Association of Realtors, couldn't resist playing off the heating-up marketplace.
“All indicators are up on the thermostat for having a strong and productive real estate summer forecast!” she said by email. “Closed listings, pending listings, new listings, median list price, median sales price, median list price to sales price — all up from May 2011. Down for May 2012 from 2011 are the months supply of inventory, median days on market to sale and end-of-the-month inventory.”
Koeninger said limited inventory in some areas or price ranges actually could have tamped down sales in May. New listings coming onto the market could bump up sales further in June, she said.