Oct. 7, 2013
Momentum growing in housing construction
By Molly Fleming
Journal Record - See the story that ran below.
OKLAHOMA CITY - With several cities across the state experiencing a dearth of housing, Oklahoma is already above the curve in the country in terms of single-family housing growth.
According to data collected by Chad Wilkerson, branch executive and economist at the Federal Reserve Bank of Kansas City, Oklahoma City branch, homebuilding in the state is growing steadily higher than the levels seen across the country. The data shows that Oklahoma homebuilding closely tracked the nation from 1995 to 2005. It fell less than the national average during the recession and has risen quite a bit more than it over the last couple of years.
Based on the trend of the data, the state is on a better turnaround as far as residential homebuilding than the rest of the country. Though the numbers look positive, they are still not what they were in 2005; however, they are at the levels seen in the late 1990s and early 2000s, Wilkerson said.
Moreover, homebuilding permits across the state are increasing steadily.
Homebuilder Jeff Click, owner of Jeff Click Homes, said builders in the Oklahoma City metro area have seen an increase of 777 home permits by the end of August 2013, compared to the end of August 2012. Some of those permits are because of the Moore tornado in May, he said, but many of the tornado rebuilds will not be reflected in the numbers until September or October. It also doesn't include Tulsa figures.
Outside of the two major metro areas, Mike Herndon with Kingston-based Herndon Construction Inc.said the company isseeing the same trend.
"In our area right now, production is way up," he said. "There is a tremendous amount of volume of customers coming through the door. I have several friends that are seeing the same thing happening."
BesidesOklahoma, Tulsa, and Canadian counties, Wilkerson saidMcClain, Osage, Garfield, and Grady counties are experiencing growth in homebuilding. The growth is being spurred by a better state economy as well as better interest rates at banks.
OklahomaAssociation of Realtors President Joe Pryor said inflation in the late 1970s, followed by the energy bust of 1982, just shut down Oklahoma City.
"You had the worst depression you'll ever see in our generation," he said.
Then when the city took on the MAPS projects and the federalResolution Trust Corp. helped sell some of the distressed properties, the city started to make a comeback.
"Now in 2013, the market is just exceptional,"Pryor said.
For homebuilders, the market is expected to get even better with several cities trying to attract homebuilders, including Chickasha and Enid.
But with an already demanding market, some builders are left wondering how they will handle the increase in demand.
Click and Herndon said their relationships with their subcontractors through the tough times will help them be able to respond to the increase.
"We had pretty good business during the downturn," Herndon said. "Remodeling pulled us through the last four or five years so we were able to help keep our subcontractors in business."
Click said helpingsubcontractors keep work helpsthe company'sbusiness, as well, because of the loyalty that is created.
"That's one ingredient of my secret sauce," he said. "Making a change in a supplier or a builder is one of my least favorite things as a builder. Some builders like to go shop (for new subcontractors) at every house they build, and I don't have the time or energy for that."
The construction industry has seen a decrease in labor, as many people left the industry when building was low in order to find work elsewhere, and just never returned.
Some went to work in the energy business because of higher salaries.Herndon said the industry isn't likely to see a salary increase unless the homebuilding trend continues.
"We have to have properties that sell at a higher price before you can get more for your house," Herndon said. "Then if it continues, you will see an increase in wages. We don't have the markup like we do in the East and West coast states. We have to be careful what we pay and what we purchase. The homeowner gets a lot better product for the price here."
As more of that product gets online, Pryor said people can expect it to sell. He said if there is a 20- to 25-percent increase in new homes next year, they will sell, and the homes will be built by quality builders.
"The builders that are here now are your strong builders," he said. "You can total confidence in their construction because they made it through the tough times."