Oklahoma Home Builder News

By Kathleen Howley

Purchase apps last week were 6.7% higher than a year ago, MBA says

Applications for mortgages to purchase homes gained for the sixth consecutive week to a level that was 6.7% higher than a year ago, back when a deadly pandemic wasn’t interrupting the spring home-buying season.

A seasonally adjusted index measuring purchase applications jumped 9% last week, according to a report from the Mortgage Bankers Association. Applications for refinancings fell 0.2% from the prior week, though the level was 176% higher than a year ago, MBA said.

Last week’s so-called purchase apps were up 54% from early April when most U.S. states were under lockdown orders to keep people at home in an effort to stem the spread of COVID-19, said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search,” said Joel Kan, an MBA associate vice president.

The surge in purchase demand drove the overall index, measuring both purchase and refi applications, higher by 2.7% on a seasonality adjusted basis from the prior week, the report said.

Demand is being driven by a shortage of homes on the market that preceded the epidemic, coupled with mortgage rates near the lowest level ever recorded.

The supply of properties on the market at the end of April was 1.47 million, the National Association of Realtors said last week. That’s the lowest level ever recorded for the month, said Lawrence Yun, NAR’s chief economist.

Last week, the average U.S. rate for a 30-year fixed mortgage dropped to 3.24%, within one basis point of the all-time low set two weeks earlier, according to Freddie Mac.

The share of applications for mortgages backed by the Federal Housing Administration decreased to 11.2% from 11.5% in the week prior, the report said. The share of applications backed by the Veterans Administration fell to 12.4% from 13.4%, the report said.

By: Janice Francis-Smith, The Journal Record

OKLAHOMA CITY – After a coordinated effort by a handful of statewide organizations concerned with residential real estate, legislation to keep municipalities from imposing purely aesthetic design standards has now become law.

Senate Bill 1713 became effective when Gov. Kevin Stitt signed the measure on Thursday.

SB 1713, by state Sen. Kim David, R-Porter, and state Rep. Ryan Martinez, R-Edmond, was written to prevent municipalities from imposing building design regulations for single-family residential zones based on aesthetics alone.

Such regulations drive up the cost of construction, making it harder for builders to provide the amount of affordable housing that Oklahoma is projected to need over the next few years. The Oklahoma Home Builders Association, Oklahoma Association of Realtors and Oklahoma Coalition for Affordable Housing came together to urge lawmakers to pass the legislation.

“The ability of persons from all economic segments to own a home is one of many reasons America is who we are,” said David in a statement provided by the OkHBA. “The commitment from home builders to defend property rights and continue to protect all Americans is why we were so pleased to work alongside OkHBA and pass legislation that will continue to uphold these ideas.”

The Oklahoma Senate held an interim study on the matter in October. Daniel McClure, deputy general counsel, Oklahoma Municipal League, had defended municipalities’ efforts to ensure that builders used high-quality materials in construction, asserting that design standards improve the quality of affordable housing in the towns that implement such rules.

A 2017 study by the Washington, D.C.-based Cato Institute found that municipalities across the country have a history of using such design standards – addressing no safety need but purely based on aesthetics – to deliberately keep prices high and keep lower-income individuals from buying homes in certain neighborhoods. However, the study ranked Oklahoma as having the least amount of unnecessary restrictions of all 50 states.

Still, some municipalities in Oklahoma, such as Tuttle and Bixby, had passed some regulations restricting some exterior finishes such as vinyl, wood and aluminum siding that would otherwise be permitted under the International Residential Code.

According to the U.S. Department of Housing and Urban Development, families that pay more than 30% of their income for housing are considered cost-burdened. According to that standard, more than 40% of Oklahomans are cost-burdened and would have to make at least $15.54 per hour to afford a modest two-bedroom apartment. Oklahoma is projected to need 7,454 housing units and 11,630 rental housing units for families earning 60% or less of the area median income.

Some neighborhoods within Oklahoma municipalities have special designations – such as historic preservation – that prevent certain materials to be used on the exterior of homes. SB 1713 includes provisions for historic districts, planned unit developments and other neighborhoods where homeowners have agreed to maintain certain design standards to preserve those restrictions.

Curtis McCarty, a homebuilder and president of the OkHBA, said the legislation would help first-time homebuyers get into a home.

“If we don’t find ways to keep housing affordable, we will eliminate a group of people that would like to be homebuyers but end up renting,” said McCarty.

“Cities and states might not be able to prevent the high product costs and rising interest rates that affect the housing industry nationwide, but fortunately they can prevent more costs that come from adding unnecessary design regulations to homes,” said builder M.J. Farzaneh of Home Creations.

By: Sonya Colberg, The Journal Record

Real estate agent Jared Kennedy picked up the phone and heard, “Water is pouring through the ceiling!”

Hmm, this could be bad, he thought. But he said he hoped just a little water had seeped into the house. He figured it could be patched up in a couple of days.

The agent had sold the vacant house and set up an April 6 close date, well into the coronavirus outbreak. The buyers initially declined the pre-closing walk- through because of COVID-19 concerns.

Then, at the last minute, the buyers decided to walk through the house.

“Good thing they did,” Kennedy said.

“When they got to the house, the upstairs mini-fridge had an ice maker. The line busted off it. And it flooded the entire house,” said Kennedy, Oklahoma City Metropolitan Association of Realtors board member. “It caved in the ceiling. Everything had to be completely gutted and remodeled.”

The repair bill hit $128,000. Insurance handled the costs for the 4,800-square-foot house after the $3,000 deductible.

“Everyone took it well,” said Kennedy. “And the house is still set to close.”
The COVID-19 near-disaster demonstrates how people’s attitudes have changed toward buying and selling homes.

Oklahoma is adjusting, though national home sales suffered the biggest drop in almost 10 years in April as much of the country remained locked down by the coronavirus.

Existing home sales plummeted 17.8% to a seasonally adjusted annual rate of 4.33 million units last month, according to the National Association of Realtors. The drop was the greatest since July 2010.

Bucking the trend

The state is not just adjusting. Under the relaxing restrictions, Oklahoma real estate is rocking. “Oklahoma is really bucking the national trend,” Kennedy said.

“Given the circumstances, I think everyone was expecting this to be a down year,” he added.

Kennedy chose this seemingly unfortunate time to open his own firm, Lime Realty, in January shortly before the coronavirus raced onto the scene.

“Three months in and the world shuts down,” Kennedy said. “It was pretty terrifying.” But he said the real estate market has been incredible for him despite the pandemic.

“I will sell twice as many houses this year as I did last year,” Kennedy said. He said he usually sells about 20 to 25 houses yearly.

Houses priced from $90,000 to nearly $2 million are all selling well, he said.

Eager buyers are flooding the market and some are even buying sight unseen to limit contact, said Nicca Collier with Metro First Realty Premier in Edmond.

“Properties that are positioned properly are selling within a few days of being listed on the MLS,” Collier said, referring to the multiple listing service available to brokers that lists properties for sale.

Tulsa home sales have recently picked up considerably, too, according to Paul Wheeler, owner of Accent Realtors in Tulsa.

“We’re selling about a house a day right now with our small team,” Wheeler said. “The average Realtor sells six a year.”

The Oklahoma City metro had 2,081 closings in April 2019, averaging $204,609, with 51 days on the market, according to MLSOK.

That compares with this April’s 1,908 closings (down 8.3%), averaging $215,990 (up 5.56%), with just 41 days on the market.

Tulsa closings fell to 1,309 in April, down 7.1% from last year. Average selling price hit $184,726 (up 4.64% over 2019), according to RE Datum. Houses stayed on the market about 37 days, versus 43 days in April 2019.

Weird times

Meanwhile, in the face of the coronavirus, the business of buying and selling houses has dramatically changed. “I don’t know that I’ve seen anything much weirder than this,” said Wheeler.

One in four home sellers have changed how they sell their houses in response to the virus, according to the National Association of Realtors.

Wheeler said people living in the houses they’ve put up for sale initially said, “I’m not sure I want strangers, potentially ill strangers, going through our home.”

Some sellers have requested virtual home tours to cut personal contact. Agents say they have experienced sellers backing out of open houses, though more have recently begun accepting the idea of holding an open house – with safety stipulations.

Listings drop

With concerns and shelter-in-place recommendations still fresh, the state’s home listings slowed significantly in April, according to MLSOK Inc.

New listings in Oklahoma dropped 13.4% for single-family homes, while pending sales fell 9% in April.

There are about 10,496 homes for sale in Oklahoma, listed at a median price of $269,900, averaging about $106 per square foot, according to Redfin.

The lack of inventory is good news for sellers, bad news for buyers. Inventory in Tulsa, Creek, Okmulgee, Osage, Pawnee, Rogers and Wagoner counties plummeted by 36.6% to 4,981 homes for sale, according to RE Datum.

Consequently, buyers have readily accepted the masks, gloves, hand sanitizers, booties and social distancing requested in today’s house showings, agents say.

Buyers and agents typically mention they will be wearing masks, at least, when requesting a house showing.

Open houses virtually shut down for a couple of months during the heat of the pandemic restrictions. But agents say open houses are happening more often now in the Oklahoma City area.

In Tulsa, sellers of only one occupied house represented by Kennedy have wanted an open house, he said.

“I have seven active listings right now. And three will be open this weekend,” he said.

“Under normal circumstances, probably all seven would be open.”

So, the business of selling houses has become more complicated, while the Oklahoma market currently appears healthy.

Market drivers apparently include fewer houses for sale, pent-up demand after eased restrictions, approach of the moving season and – likely most of all – near-record low interest rates of about 3.3% for a 30-year loan.

Future unknown

No one knows how COVID-19 will affect the local market over the rest of the year.

The usual spring buying season will be missed, NAR chief economist Lawrence Yun said in a statement, so a later bounce-back won’t make up for lost sales in April through June. He projects sales will be down 14% nationally for the year.
Oklahoma tends to lag behind much of the country in economic trends, so it’s likely to take about six months before the true effects of a coronavirus economy show up. But Kennedy, Wheeler, Collier and others agree on how local real estate may look going forward.

“We’re feeling it already,” said Wheeler. “We’re calling it the bounce.”

By: Sonya Colberg, The Journal Record

CAUTION – Trouble Ahead?

The Pandemic surrounding us has sent shock waves into the lives of individuals and families worldwide.  With so many deaths and the continuing illnesses almost everyone is scared, frustrated, and confused.

There are currently 26 MILLION Americans who have filed for unemployment.  One in every six of us have lost our jobs.  How do we cope?The debate of whether to reopen more retail businesses or remain at home is raging.  When can people safely go back to work and earn a living?

To give some financial relief, mortgage loan servicers have been instructed to allow forbearance from monthly mortgage payments.  Homeowners can ask for and receive delays in making those payments.  Here is how Experian, one of the three major credit bureaus, describes forbearance (thanks Debra P):

“Loan forbearance—a short-term reduction or suspension of payments in response to a borrower's temporary hardship—can preserve household cash flow in times of economic difficulty. It can also have significant impacts on your credit history and credit scores.”

Did you read that last sentence?  That is the part of forbearance NO ONE is discussing.  When a loan payment is missed it is required that the loan servicer report that event to the credit bureaus.  Late payments on a mortgage loan are much worse on credit scores than missing a payment on a vehicle or credit card. 

In reading thousands of credit reports over the years, I have never seen a forbearance listing.  Foreclosures, short sales, late payments are listed.  Not forbearance.  How will the policymakers handle this current crisis?  Will they instruct loan servicers to not report forbearance files the same way?  We cannot depend on that.

If you must ask for forbearance, do it.  If it seems like a convenience during this time of stimulus checks, etc., I recommend avoiding that path for as long as possible.  You do not want late mortgage payments to be reflected on your credit reports for years.  Those listings will damage your ability to get the best deals on most everything you buy.

HINT:  Fannie Mae and Freddie Mac who buy packaged loans from mortgage lenders are charging the lender from 5 – 7% of the loan amount to purchase loans in forbearance.  That is far more than any profit made for originating, processing, underwriting, and closing the loan.  Lenders are being forced to offer forbearance with no place to go for liquidity which they need to keep making loans. 

My days are full of borrowers executing refinance or purchase transactions as interest rates are terrific.  I took time for this article because of the gravity of making the wrong decision.  

It is important to have a trusted guide when in the wilderness.  I am that guide for your mortgage needs.  Be safe, be mindful, be blessed.  I am.  NMLS #310445.  An Equal Housing Lender.

Kent Carter

https://kentcarterloans.com/

What a strange time we live in.  How can a bug from a bat in China shut down the world?  Everything is going great, then wham, the wheels fall off our cart.  It begs a lot of questions like: How in the world did this happen?  How long will it last?  Will I survive? What will the new normal look like?  These are the questions and thoughts on everyone’s minds.

Those of us in the Home Building industry tend to have a take charge, I can fix any problem if you just get out of my way personality.  That is a wonderful trait until circumstances arise that are completely out of our control and there is nothing you can to do fix things.  That is when we become frustrated, anxious and feel powerless.

One benefit of being a Home Builder a long time is knowing that challenging times are always lurking around the next corner.  Some events we can see coming.  Others, like Covid-19, completely blindside us.  Those of us in the building industry are resilient and we have survived challenges in the past.   In my own career I have survived the 80’s credit tightening with 17% mortgage rates, the Oil Bust, the S&L crisis and credit crunch, the .Com bubble bursting, 9-11 and the Great Recession.  Those of us in the industry around for those crises, persevered by staying calm and knowing that the bad times will end and good times will return.

You get through the tough economic times with great communications with your customers, your suppliers, subs and most of all your bankers.  You have to be flexible, innovative and willing to accept the new norm, whatever that may be.  It’s also important to support the Home Builders Association, especially during a crisis.  It is the Association on a Local, State and National level that brings the collective strength and influence of all of us to bear on decisions made about our industry.

I saw this first hand during my tenure on the National Association of Home Builders leadership team. During the boom before the financial meltdown, new home production topped 2 million units in 2007.   It dropped to 400,000 units in 2009, the year I was Chairman.  Even though we saw the problems looming, no one knew the depth of the slide we would endure.  Everyone was asking the same questions we are today: How did this happen? Will I survive?  How long will it last? What will the new normal be?  Through the constant conversations with the new Obama administration, bank regulators, legislative leaders and the Federal Reserve, we were able to put together two stimulus packages in the same year, save the mortgage market and set the stage for a recovery.  The Local and State Associations throughout the Federation did their part as well.  It was hard.  The recovery took longer than anyone wanted.  A new norm was established in mortgage lending, construction loans and appraisals.  But we not only survived, we flourished in the last few years.  

Now we meet our next challenge, Covid-19.  This is certainly an event no one saw coming.  The frustrating part of this episode is that it not only affects the health of our business but it can literally be lethal to our physical health as well.  Again, our Association has been on the forefront in keeping our industry alive.  Our leaders here in Tulsa and Oklahoma convinced our Mayors and Governor to designate home building an essential business.  NAHB is working tirelessly to keep credit markets liquid and was successful in removing the exemption of home builders from the Payroll Protection Program.

When you are in the middle of a storm, it is hard to remember the sun is still shining. Going into this crisis, business was very good.  That momentum should help us bridge the downturn on the short term. Long term, the world has to go back to work.  President Trump announced his initial guidelines for restarting the economy.  Governor Stitt has put a task force together to reopen the State.  The Mayors of the area cities are convening working groups to plan for the rebooting of business.  Reports of treatments of the virus are encouraging and it seems the number of cases has hit its peak.  There are a few hints of sunshine.    

I know we will get through this just like we have done in the past.  People will always need homes and I can think of no other profession that brings more joy than providing the American Dream.  In the meantime, if you are not too busy, take time to reconnect with family, reflect on priorities, and pray.  

God Bless Everyone,

Joe Robson      

With prospective buyer traffic severely diminished in the wake of the coronavirus pandemic, home builders would be wise to scale back on their advertising investments. But cutting across the board is reckless and could lead to long-term challenges.

To help business owners and sales teams determine how and where to adjust their marketing strategies, NAHB will host a webinar in partnership with the online sales and marketing group Do You Convert on Thursday, April 16, from 1-2 p.m. Central Time 

“Keep Your Traffic Flowing: A Marketing Playbook for COVID-19” will examine lessons learned during previous shocks to the market and share how those principles — coupled with the latest digital and virtual marketing tools — can be applied to our current market challenges. Webinar participants will also learn a step-by-step playbook for which efforts to turn down, as well as when and how to efficiently realign their advertising strategies once markets stabilize.

This will be the latest in a series of webinars hosted by NAHB focused on answering common questions and concerns from housing industry professionals pertaining to many impacts of the coronavirus. Each webinar provides valuable insights for how to strategically navigate a business through this challenging and uncertain economy.

To attend the webinar “Keep Your Traffic Flowing: A Marketing Playbook for COVID-19,” register here.

You can also view recordings of previous webinars about small business loans, jobsite safety, tax relief provisions and more on nahb.org.