Oklahoma City Real Estate and New Home Construction

Home energy saving tips

Administrator — Fri, 08 Dec 2006 22:55:48 +0000

This is the first post of what I intend to be several in a series describing some easy, inexpensive tips to help cut down on energy use in your home. Everyone knows that the price of energy is only going to continue to rise in the future. The percentage of the world’s population living in industrialized areas is growing dramatically spurred heavily by development in China and India. This pace of increased demand is going to cause energy prices to rise, perhaps significantly if demand starts to outstrip supply. There are many easy ways to cut down on your personal energy use without making any sacrifices. This will help you with lower bills now and also help temper the pain of rising energy prices. There are of course other benefits including a healthier living environment and reduction in greenhouse gas emissions, but I will talk more about those later. On to the first tip…

Compact Fluorescent Light Bulbs - Installing compact fluorescent light bulbs in your home is probably the easiest thing you can do to cut your energy use. These bulbs may seem quite a bit more expensive than traditional incandescent bulbs, but they may last more than 4x as long while using less than 1/4 the energy. The net expense is actually much less for the CFLs especially if you consider the cost of the time and effort saved from buying and changing your light bulbs only 1/4 as much. These bulbs are readily available at most retailers and come in several configurations. I would suggest you by a few and slowly start to replace your incadescents with CFLs as they burn out.

The housing bottom?

Administrator — Tue, 21 Nov 2006 17:29:01 +0000

The Wall Street Journal published the results of an economic survey in today’s edition saying that the surveyed economists believe 2 to 1 that the housing prices will level off or fall slightly next year. This doesn’t sound exactly like earth shaking news to me. The same story also states that the average home price rose by 13.4 percent in 2005. I don’t understand why people are so worried about the ‘housing slowdown’ when all that is happening is that home prices aren’t increasing as much as quickly as they have in the past, especially after such enormous increases in the past few years.

Now, I don’t mean to say that home price increases are the only problem, but I believe that pricing is the root cause of a myriad of problems. When prices were rising so quickly, the housing market attracted a lot of investment and many new homes were built. At the same time, the builders kept trying to push the prices up. They were able to make these increases for a while because of the availability of ‘cheap financing’. What happened then is that the Federal Reserve did their job. One of the Fed’s main concerns is controlling inflation which I think was obviously getting out of control in the housing market. When the Fed started to raise the base interest rate, home sales started to decline and builders had to cut back on their prices so the buyers could afford the homes. The whole situation is a good example of basic economic theory. The Fed did their job and the result was a stabilization of the housing market.

The overwhelming concern in the general public seems to me to be a reaction to the slowdown of a popular market. The housing market simply isn’t exciting when things are stable as compared to double digit gains every year. While the public at large can be disappointed and worry about the current situation, I will continue to be perfectly happy and accept that we are landing near the top of those fantastic run up years.

Is city life cheaper than suburban life?

Administrator — Sat, 18 Nov 2006 17:01:26 +0000

I was reading a Buisnessweek article this morning reporting on a study about the costs of living in the city versus the suburbs. The study determined that the conventional wisdom that living in the suburbs is cheaper may not always be true. The study’s authors say this is because the cost of transportation has increased enough that the cost to commute may outweigh increased city housing costs in some metro areas.

My main concern with this article is that it purports that the decision to live in the city versus the suburbs should be completely analytical and based on the total cost of housing and transportation. One immediate flaw I see is that the study did not consider possible differences in everyday living expenses for the two locations. If a person wants to completely analytical about this decision then they must consider a total budget for both locations. For that matter to completely analyze the costs someone must project the future cost and earnings ramifications of both locations. Perhaps one location has a much better school system than the other. This could give a family’s children better chances of earning higher wages after they are done with school. My point is that it is extremely difficult to quantify the total costs of one location versus the other and unless the cost differences are obviously extreme this should not factor into a person’s decision.

I think the most important criterion to consider when choosing where to live is your anticipated quality of life. You should simply decide where you prefer to live. Many people enjoy being close to restaurants, bars, and other attractions. The city life would be great for them. I like more room around me and some privacy. My preferred place is in the suburbs. Your quality of life affects your overall health and everyday actions. You should find a place that makes you happy and enjoy your life. You should not worry that it might cost $5 more a day to live in the suburbs because you simply can’t know with any precision the costs of one location versus another.

Housing permits drop

Administrator — Fri, 17 Nov 2006 16:02:07 +0000

It was reported this morning that housing starts fell to a 6 year low during October on a national level. While this data is important because the housing industry is so large that it affects the domestic economy, I think that the number of individual house sales and starts are influenced on a microeconomic level. What I mean is that the amount of new construction in a given area is determined mostly by local conditions and at best indirectly influenced macroeconomic factors.

My local experience over the last month contradicts the reported data. During the first six months of this year I sold only a few new home sites. In the past two months, I sold eight new home sites and one new house. These home site sales have all been to local builders who intend to start construction straight away.

I hear many people talking and worrying about the state of the construction industry every day. I see some potential home buyers trying to negotiate large concessions on new homes. I read the common news stories about how bad the housing market looks. The funny thing is I don’t see any evidence of a dire situation. The builders I am associated with in the Oklahoma City area are still confident and happy and none of them is resorting to large price cuts or offering abnormal concessions. We are still going strong in Oklahoma City because our local economy is what drive our industry, and the local economy is healthy and should continue that way for the foreseeable future.

New Home Prices and a Tip to Save Thousands of Dollars

Administrator — Fri, 17 Nov 2006 00:44:08 +0000

Are you or is someone you know planning to buy a new home? Do you know all of the costs a home builder incurs to sell a new home? Learning about just a few of these costs could help you save many thousands of dollars and allow you to buy the home of your dreams!

Many new homes are built in the United States each year. A lot of these homes are known in the construction industry as spec homes. What this means is that the home builder picks out some land that he or she likes, a house plan that he or she likes, and builds the home on the property ‘spec’ulating that someone will buy the home when it is completed. Most often the building professional contracts with a real estate agent to market the home to potential buyers. This whole process finally ends when the seller’s real estate agent finds a buyer and closes the sale of the home.

This process has been standardized and is used all over the United States as well as many other parts of the world. Unfortunately, this process effectively drives the price of the new home up by 10-20% or more! There are two major reasons why this happens.

The first and most obvious reason is that the usual process includes one or more realtors. Anytime an extra component is added to a machine, the cost of the machine increases and risks of failure increase as well. The realtors usually add at least 6% to the price of the new home. This amount is equal to the commissions that they charge to market and sell the home. The builder must include this cost in their base price in order to receive the profit that they want. Also, the realtors limit the communication between buyers and sellers which often results in lost sales. This is especially problematic when the buyer and seller are represented by different realtors. Any messages that a seller wishes to communicate to the buyer or vice versa have to be transmitted through the two realtors. By the time the message reaches the intended recipient it has been reinterpreted by at least two people and the original intent may be completely forgotten.

A second major price driver stems from the uncertainty of selling a spec home. A competent builder should know approximately how long a home will take to construct, but if they are building a spec home the can only guess about the time it will take to sell the home. The builder’s problem is that once the home is complete it can be very costly to maintain. Some of these expenses may include utilities, insurance, and interest on a construction loan which can easily add up to several thousand dollars a month. Also, as long as the home is unsold the builder may be unable to start another project if all his or her investment capital is tied up. These factors mean a builder has to increase the price of the home even further to make sure the project is profitable even if it takes a long time to sell.

Fortunately, there is an easy solution to these problems. Simply find a builder and contract with them to build you a custom home. A custom home can easily be tens of thousands of dollars cheaper than a comparable spec home. This approach eliminates the cost and hassle of dealing with a realtor, except maybe for purchasing the land. Also, the builder’s uncertainty of selling the home disappears and they do not have to include any premium in the total price to compensate for this risk. These two factors alone can easily save a home buyer many thousands of dollars. Beside the monetary benefits, I have not even mentioned the benefits of choosing a home plan and designing a home to perfectly suit your tastes.

The fantastic results of choosing to have a custom home built are tremendous versus the alternative of buying a spec home. Everyone involved should be much happier with this process, except possibly the realtors…

Danny Ferguson owns Homestead Community Development LLC an Oklahoma custom home builder and real estate developer.