Builder backfire
Oklahoma City builders began 2018 with home starts lagging, but are sensing renewed interest from buyers.
Oklahoma City builders bounced back from a fiveyear low in home starts in 2017, but started this year back at 2016 levels.
Builders took out permits to start 4,751 new homes last year, up 8.4 percent compared with the year before, according to The Builder Report published by Dharma Inc. in Norman.
After something of a rush for permits in December, they strolled into 2018 with just 653 permits issued in January and February, one more than in the same period in 2016, according to The Builder Report.
The Builder Report tracks homebuilding in Oklahoma City, unincorporated Oklahoma County, Bethany, Blanchard, Choctaw, Edmond, Midwest City, Moore, Mustang, Newcastle, Noble, Norman, Shawnee and Yukon.
A price increase for Oklahoma City building permits that took effect Jan. 1 probably caused a dash for them in December followed by slack at the first of the year, said Caleb McCaleb, owner of McCaleb Homes in Edmond.
“Many builders bought their permits in December to avoid the extra costs. The permit costs went up $1,200 to $1,500 per home for an average size home in the city of Oklahoma City,” he said. Plus, McCaleb said, “I believe that rising interest rates are getting buyers off the fence to purchase the inventory of new homes on the market. That, in turn, is spurring builders to start new homes for sale for the summer buying season.
“Most builders are seeing very good traffic through their homes with the better weather and an Oklahoma City economy that is rising with the rising price of energy.”
Ideal Homes’ sales were off 9 percent in the fourth quarter of last year, but the Norman-based builder started off this year exceeding all expectations, said Steve Shoemaker, vice president of sales and marketing.
“We surpassed our first-quarter projections the first week of March, and we are on pace to sell 219 new homes this quarter, which is a 56 percent increase over our projections,” Shoemaker said.
Half of Ideal Homes’ buyers are first-timers. Shoemaker said demand is strong across the metro area for both first-time and move-up buyers. “We’re likely to see a strong uptick in permits and a good year for our industry,” he said. “We are seeing strong demand in all 15 of our communities spread across Norman, Moore, Edmond, Deer Creek, Piedmont, Mustang, Yukon, Choctaw and Stillwater.”
Homes By Taber, based in north Oklahoma City, had a record year last year and has no plans to slow down, said Taber LeBlanc, president. The company, which sells mostly to move-up buyers on their second or third home, has several new additions opening up in 2018 and is hiring, LeBlanc said.
Home Creations, based in Moore, anticipates a 10 percent increase in production this year mainly in two new additions in Edmond, co-owner Ali Farzaneh said. Shoemaker said Ideal Homes expects to see a surge in inquiries and contracts once the reality of rising interest rates sets in, especially for a crop of buyers who’ve never known such.
Rising materials and labor costs — as well as demand itself — also are pushing home prices up and getting attention.
“There has been a lot of talk about price increases and increases in interest rates. Depending on who you ask, two to three rate increases are imminent in 2018,” Shoemaker said. “The realization that the same home today will cost you more a year from now is pulling some demand forward. People who were waiting are now jumping off the fence because of the impact to their monthly budget.”