I find it interesting how often “numbers” don’t really mean anything.  In an era when information and data rule, careful analysis is sometimes left by the way-side, causing many to draw inaccurate conclusions that lead to decisions based on erroneous information.  This can be true whether the numbers indicate something positive or negative.

I’ve made several posts over the past few months making the case for how strong the Oklahoma real estate market really is, despite negative national stories stating otherwise.  What I haven’t addressed is what recent data are suggesting about the Oklahoma real estate market.  In January 2006, there were 483 permits for new homes pulled Oklahoma City metro, compared to just 271 in January of 2007, a decline of 44%.  Just by numbers, that seems like a bad thing.  Richard Mize, Real Estate Editor at the Oklahoman, filed a story in today’s business section, headlined “Builders hope sunshine will help thaw home sales”, which speaks to that very issue.

As I’m quoted in the article, there are legitimate, healthy reasons for the decline in permits in January 07 when compared to January 06.  This time last year, we were experiencing a record demand from home buyers.  Just meeting that demand alone accounts for part of the number of permits pulled.  Record demand also bolsters confidence among builders, which caused many to ramp up production of “spec” homes, which are homes that are started in speculation of a buyer.  Record demand plus record confidence equals record permits being pulled.

Here we are in January of 07, facing a number of factors that have legitimately lead to a reduction in the number of permits pulled in comparison to this time last year:

» The record demand in January 2006 is now cooled to strong, but reduced levels in January of 2007.  There are fewer buyers in the market, therefore it’s expected that permits should be down.

» The third quarter of 2006 experienced a slowdown in the demand for new homes across the nation.  Because the market demand cooled, builders were left with more un-sold inventory and have been waiting until inventory is reduced before pulling permits for new starts.

» The cool-down also corrected an over-confident industry, which is now behaving more conservatively and responsibly in producing new inventory going into 2007.

» We’ve had unusual winter weather this year, with nearly 5 weeks of ice and snow affecting both construction and the ability for buyers to spend time shopping for their new home (Which is one reason why we put so much effort into a great web site).  When homes can’t be built or bought, permits aren’t being pulled.

When you combine these three factors, it makes sense that “the numbers” are considerably lower.  This isn’t bleak, this is just reality, and it’s a good thing for our market.  Supply is now more in line with demand, which will further stabilize and protect property values.  That’s good for buyers, home owners, and builders alike. 

The Oklahoma City metro real estate market remains healthy, and it’s a great time to buy a new home particularly in Edmond, Oklahoma City, and Deer Creek.