State home sales shine
Market wary, but ignores gloom elsewhere
State home sales shine

By Richard Mize

Published: April 15, 2008

Oklahoma home sellers are skittish and buyers are driving bargains, but the pall of pure pessimism that a national poll found over U.S. housing appears not to have crossed the state line.

That's according to Oklahoma City area builders, Realtors and lenders interviewed by The Oklahoman after an Associated Press-AOL Money & Finance poll found growing numbers of people swearing off buying a home anytime soon to avoid losing money on the investment.

In Oklahoma, there is wariness but not pessimism, despite what industry leaders here describe as an onslaught of negative national statistics and bad national news that are clouding the reality that Oklahoma, while coming off a housing boom, is not experiencing a housing bust.

Sales have slowed, but prices remain firm in Oklahoma City, Tulsa, and other big markets with statistics that are lost in the national numbers, they said.

"Perception does have a way of becoming reality,” said Edmond home builder Caleb McCaleb, past president of the Central Oklahoma Home Builders. "Local buyers keep hearing and seeing how catastrophic the residential real estate market has become in many parts of the country and it causes them to freeze on their plans here.”

Realtors and builders here are spending money to weather the statistical storm.

The Oklahoma Association of Realtors' marketing campaign, "Good Thing You're in Oklahoma,” has had ads in state newspapers, on television, billboards and yard signs since February trumpeting Oklahoma numbers that show the average sales price for an existing home rose last year 4.24 percent compared with 2006, from $143,669 to $149,758.

It's too early to tell how effective the campaign has been, but early feedback from both buyers and sellers has been positive, said Lisa Yates, chief executive of the association.

"The central point of the campaign is that real estate is local and to try to apply what is happening in other parts of the country to our market is comparing apples to oranges,” Yates said. "Our home prices and sales never skyrocketed like they did on the coasts, so we don't expect the dramatic decline that's occurring on the coasts.”

Today, the Central Oklahoma Home Builders Association will debut its own effort to counteract the blizzard of negative national news. The message: Oklahoma City housing is "Defying the Trends.”

"I applaud the Realtors' efforts through their ‘Good Thing You're in Oklahoma' campaign,” said Oklahoma City builder Jeff Click, vice president of the group. "While he who controls the media controls the message, we believe that a focused effort can help negate some of the negative national media that is creating doubt in the minds of buyers here.”

Builders are cutting back, too, McCaleb said, to help peel off some of the inventory, which has been stalled at just under a six-month supply — close to balanced but giving buyers leverage — since late last year.

An oversupply compared with recent years, the squeamishness hitting housing markets almost everywhere and tightened credit standards have contributed to a slowdown in sales here, industry leaders said.

"We are on pace to do about 5,000 new starts this year, which is the number we did in 2002. And 2002 was a good year,” he said. "The public, builders included, need to realize that 2005 was a record year at 7,500 new starts — and that record should stand alone and not be considered the norm,” McCaleb said.

Builders still are eaving building partly because the boom is over but partly "due to lack of financing with their banks,” as lenders rein in as well, said Victoria Caldwell, a Realtor, RE/MAX owner and vice president of MLSOK.com, the multiple listing service of the Oklahoma City Metro Association of Realtors.

Changes by lenders' own sources of mortgage credit are contributing to the slowdown here as everywhere, said Scott Senner, a mortgage consultant with First Commercial Bank in Oklahoma City.

"The biggest issue in the mortgage business right now is ‘risk-based' pricing that Fannie Mae has instituted on all conventional loans,” Senner said. "Borrowers who have credit scores below 720 are paying higher rates and fees, which get significantly higher the lower the credit score dips. For borrowers with credit scores below 620, conventional loans are not an option. (The Federal Housing Administration) is going to be picking up a lot of borrowers that would have gone conventional until recently.

"However, investors that purchase FHA loans are instituting their own policies and most are not buying FHA loans for borrowers with scores below 580. What this means to borrowers is that if they do not have at least average credit, they will not be getting financing. This affects the market as a whole, because if first-time buyers cannot buy, the next guy cannot move up and so on and so on.”

But broad-based statistics from city and suburban streets, even locally, cloud the fact that some house price points, and neighborhoods, are seeing more activity than others, Caldwell said.

"The moods of buyers seems to be up here. Sellers are somewhat concerned seeing a little slowdown in the upper price range here, homes over $500,000. But in general the market is still moving well,” Caldwell said.

Buyers are aggressive, said David Feisal, senior vice president of Tulsa-based SpiritBank and immediate past president of the Oklahoma Mortgage Bankers Association. He said his son is looking to buy his first house, in Oklahoma City or Yukon, and "his first three serious considerations have all had contracts submitted by other buyers before he could make an offer, and that was within 24 to 48 hours of looking at the home.”

Buyers' mood here is "good but cautious,” said Steve Shoemaker of Ideal Homes in Norman.

"First-time buyers are aware of what's going on nationally, but understand that Oklahoma City is different from Ft. Lauderdale or Chicago,” he said. "They know there's a lot of noise and they're making calculated decisions that tend to keep them in the market longer than we've seen over the past couple of years.”

Buyers are looking for bargains, said Lyne Tracy, a mortgage banker with BOk Mortgage, a department of Bank of Oklahoma.

"This is one of the best times to purchase if the buyers have a down payment, which can be as low as 2.25 percent on a (Federal Housing Administration-backed) loan. This market has created great opportunity for some. However, buyers who must sell an existing home before purchasing the next are standing on the sidelines right now waiting for better timing before selling,” she said.

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