Strong Sales and Slow Building Starts Split Oklahoma City Housing Market

2014 saw the Oklahoma City housing market slowly build back up. Pre-existing home sales have steadily increased. But even as areas near Moore and Edmond have expanded out, the home building market in Oklahoma city hasn’t quite rallied to the level market prospectors hade hoped.

According to the Central Oklahoma Home Builders Association and Oklahoma City Metro Association of Realtors, buyers have been paying more for their houses, but this positive development has been offset by a drastic shortfall in the supply of new housing and labor shortages. The inventory of new homes is dropping drastically, and while the prices are higher, demand has dipped.

With the strong local economy, high employment rates, and low mortgage rates, it’s difficult to tell exactly why the single-family new homebuilding market is underperforming even as the sale of existing housing remains strong.

Construction was slower this year in part because of the weather. The severe winter conditions caused construction delays, as did the exceptionally wet spring season. But as things warmed up and dried out, the awaited upturn hasn’t quite materialized.

According to the building permit reports, home building stats are down 8.9% compared to last summer across Canadian, Cleveland, and Oklahoma counties. Permits were down 10.3% in Oklahoma City, Edmond, Midwest City, and Norman for the first half of 2014.

Part of the problem lies in the lack of developed land. When the real estate market tanked in 2008, land investment and acquisition did, too. Because it takes an average of two years to credential and entitle land tracts in preparation for development and building, and nobody has been buying land since 2008, there aren’t a lot of lots that are ready to become developed subdivisions. Developers are just now beginning to invest in land again, and these lots won’t be ready for another 2 years.

Another issue is that the supply of new homes has been so low that the prices for new homes, as compared to prices for existing homes, has been disproportionately high, which has kept buyers from entering the game. the Oklahoma City Metro Association of Realtors report a 2.58 increase in home sales for July, with and overall increase of 12.07% over the last summer’s rates.  The housing inventory of newly built homes is lowest in the middle- and lower-middle price range where most people live. There is a 3.3 month supply for homes priced $125,001-$200,000, and a 3.4-month supply for homes priced $75,000-$125,000.

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