With homebuilders in nearly full recovery and an apartment boom taking off, Oklahoma City is in a kind of catbird's seat for housing construction.
In the country as a whole, single-family woes are fueling the multifamily surge. Stubbornly persistent foreclosure rates, mortgage bankers' continued reluctance to lend to any but those with the very best credit and most stable employment history, as well as still-high unemployment in most places, have apartment investors investing in new product.
But here, a healthy local economy — enviable unemployment rates, population growth on the rise — has cautious and seasoned but willing single-family builders building again.
In the first half of the year, builders in Oklahoma City, Edmond, Midwest City, Moore and Norman started 1,633 houses — 31.5 percent more than the same period in 2011 — and have been steadily increasing construction since the bottom in 2009.
Where is the apartment demand?
The metro area has had foreclosures, too. While nowhere near the sky-high rates in other cities, foreclosures have turned homeowners into renters — at the same time tough mortgage underwriting standards are keeping people in rental property.
Another factor is creating demand for apartments here while not taking much away from demand for single-family housing: dilapidated apartment complexes dating to the 1970s and earlier.
The 1980s oil and real estate bust stopped apartment construction here for a decade until the late 1990s, so those older properties probably stayed in service longer than they might have otherwise.
CB Richard Ellis-Oklahoma brokers William T. Forrest and Eva M. Wills, in their midyear Oklahoma City Apartment Market Overview, estimated that up to 2,000 apartment units have deteriorated past the point of habitability since 2008 — they're gone from the marketplace.
Judging from a few calls and emails I get from renters in response to any reporting on the apartment market, more than a few apartments here are barely habitable and, without significant improvements, are about ready for razing.
Some investors here are taking the buy-low-and-add-value route, acquiring dogs and fixing them up. But new apartment construction is everywhere — here and out there in the rest of the country.
It has some people — out there — eyeing the incoming supply and worrying about overbuilding in the multifamily market. The boom “will lead to oversupply,” a multifamily player flatly told an interviewer for PricewaterhouseCooper's second-quarter Real Estate Investor Survey. Another one said: “Excess supply reduces our ability to push rental rates.”
But here, Forrest and Wills found room to grow more apartments: Rents continue to rise, and occupancy is at 93 percent across the metro area as a whole. The brokers counted 10 new apartment properties under construction or on the drawing board — a total of 2,667 new individual apartments.
It's not too much: “Steady new construction is expected to continue through 2013 due to our good local economy and strong multifamily fundamentals,” they reported.
Housing is getting hammered, in other words — by framers. I think we can all live with that, homeowners, homebuyers and renters.