Local home builders facing tough winter: Sales likely to drop through March

Oct 28, 2009 (Tulsa World - McClatchy-Tribune Information Services via COMTEX) -- DOWB | Quote | Chart | News | PowerRating -- Local home builders and real estate agents may be in for a bumpy ride over the next few months.

Sam Rader, CEO of Coldwell Banker Select in Tulsa, said several factors, including the expiration of the $8,000 first-time homebuyer tax credit, will likely cause home sales to drop at least through March, though a slow recovery may begin shortly afterward.

"I see light at the end of the tunnel, and I'm reasonably sure it's not an oncoming train," he said.

Rader's comments came Tuesday at the Home Builders Association of Greater Tulsa's annual Economic Forecast Seminar at Forest Ridge Country Club in Broken Arrow.

Rader said the tax credit has been a huge influence on the types of homes manufactured and sold.

"We're looking at a market active in the middle end, from $100,000 to $200,000, while the high end and the low end have been extremely difficult," he said.

Rader said the low-value home market, especially in the northern part of Tulsa, is not faring well.

Many people in the housing industry have been pushing for an extension of the tax credit.

Rader said Congress has mixed views on the proposal, while the White House appears cool to it.

Tulsa area home sales are down 9 percent so far this year compared with the same period in 2008.

But construction has taken a bigger hit: New-home sales recorded by Northeast Oklahoma Real Estate Services -- the multiple listing service that compiles data -- are down 30 percent.

However, many new homes are sold directly by the builder and are not recorded by NORES.

Metropolitan Tulsa continues to fare much better than the nation as a whole. Median home prices here at midyear were down 2.7 percent from a year earlier, compared with a drop of 11.4 percent nationally, Rader said.

Additionally, an estimated 70 percent of homes for sale in the Southwest are on the market because of foreclosure or short sales, but the number is only 20 percent in Tulsa.

Ben Cowen, president of BOK Mortgage, pointed out that interest rates are being directly manipulated lower by the federal government as it buys a huge amount of mortgage-backed securities.

"Whenever the rate gets up to 5.25, we see their activity pick up," he told the gathering.

Cowen estimated that the government can keep up its pace until March or April, unless more money is allocated to the program.

Lending regulations continue to be a potential problem for buyers, Cowen said.

"The good news is that credit tightening has bottomed out," he said. "The bad news is that credit is pretty damn tight."

Furthermore, an increasing number of lenders are only allowing loans to be issued that are 80 percent of the total value of the home, which is leading to higher down payments.

Cowen said the total dollar amount of mortgage activity may drop in 2010, but a significantly larger proportion of that will be lending for home purchases rather than refinancing.

Robert Evatt 581-8447 robert.evatt@tulsaworld.com

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