Oilless boom: Homebuilding is rising on low supply and high demand
Homebuilding is closing in on a pace not seen since the last oil boom.
Builders in the Oklahoma City area took out permits for 4,438 new houses through September, 12.9% more than this time last year, according to Norman-based Dharma Inc.'s Builder Report.
It was more than in the first three quarters of any year since 2013, when the market was finally bounding out of the Great Recession, the local economy was humming, the oil patch was thriving, and crude oil was selling for more than $100 per barrel.
That was then. For construction to be reaching such heights now — with a global pandemic still on, the economy still hurting badly, and the most unsettling presidential election in generations — might seem astonishing but for two things:
There's a housing shortage, and mortgage interest rates are staying low, according to Freddie Mac, averaging just 2.88% this week for the traditional 30-year, fixed-rate loan, and 2.36% for a 15-year loan, with less than one discount point paid up front. One point equals 1% of the loan amount.
Builders came away from the nine-day Parade of Homes Fall Classic last weekend with smiles, said Andrew French, president of the Central Oklahoma Home Builders Association, which organized it.
“We have received positive feedback from a number of participating builders who either sold their parade home(s), sold other spec homes, or signed custom-build contracts as a result of the parade. Our local new home construction industry continues to hold strong during this challenging year,” French said.
Here are some comments from leading builders.
"Business has been very good up to this point for the year. However, cost of material and availability has become increasingly more expensive and limited. Many builders in the metro are experiencing the same issues.This has driven up our construction prices considerably," said John Burris, director of sales and marketing for Home Creations, based in Moore.
He added, "Some buyers still want to negotiate on pricing or incentives and do not understand that demand is higher than supply in this current market. Unfortunately, we are not able to come to an agreement if they do not understand the current real estate market environment.
"Interest rates are at or near record lows, and demand is only increasing. Our customers want to take full advantage of this. They are able to get into their new home knowing that they have the best interest rates in history, and are building great equity into their home buying now instead of waiting."
Homes by Taber
"The historic low interest rates are making a major impact on the decision to move forward now, but people have also been in their homes more so now than ever," said Lindsay Haltom, director of marketing for Homes by Taber, based in Oklahoma City.
"With cooler weather approaching fast, they are going to be spending even more time indoors, adding to the stress of homeschooling and working from home. All of the flaws and pain points that homeowners have been choosing to ‘just live with’ over the years are becoming unbearable. They are ready to make a move. Homeowners need more space and they aren’t willing to wait longer for it. The low interest rates are, in many cases, allowing them to have a very similar payment with a new, more spacious home."
She said not many people are deciding to wait to buy.
Low inventory, low interest rates, and pent-up demand led to 10 home sales this week for Ideal Homes and Neighborhoods the first three days after it opened its Greenleaf Trails addition in Norman, said Erin Yarbrough, director of marketing.
"Our biggest challenge currently is keeping up with the development of new home sites to meet demand," she said. "We're making strategic decisions to increase the size of new section openings to meet that need. We're also working diligently to grow our trade base to help increase production levels. This isn't an easy process as we are unwilling to compromise in our quality and values, which makes the vetting process for new trade partners incredibly important."