Would-be home buyers have relatively little to choose from even though metro-area home builders built and sold more houses in 2021 than any year in the past decade — maybe ever — and top companies broke production records.
The 6,618 new houses, about 10% more than in 2020, didn't appear to put a dent in the shortage, which is tied to the Great Recession of 2007-2009 and exacerbated by almost unbelievable demand.
Realtors said 2021 ended with a mere 24 days of inventory as the extreme sellers' market rocked on. Six months of supply is considered a balanced market.
Rising mortgage rates are expected to dampen demand some, but probably not much, if they stay below 4%.
Rising home prices are another thing, and they could do more than higher interest rates to cool demand.
Rates touched 3.45% last week for the traditional, 30-year, fixed-rate mortgage, up from 3.22% the week before, on the prospect of the Federal Reserve tightening monetary policy to slow inflation, according to Freddie Mac.
Great Recession effects linger into the pandemic
Even after a dozen years, the damage done to the home construction industry by the Great Recession hasn't been repaired — too many builders just quit, and the lack of work sent tradesmen into other lines.
That, industry experts say, is partly, if not primarily, why the market is so tight for labor and for houses themselves, although persistent low mortgage interest rates have a lot to do with it.
Material shortages and logistics problems related to the coronavirus pandemic have made it worse.
Home builder Brandon L. Jackson said he installed a microwave oven in a new home this week without the trim kit — the frame and ducts that surround the oven in the cabinet cut-out.
The supplier told him, "You'll get it when you get it," said Jackson, president of the Oklahoma Home Builders Association and owner of Tara Custom Homes in Tulsa.
"Every week it's something," Jackson said. "It's ridiculous."
Shortages decrease customer satisfaction
Problems or not, builders were booming as best they could all last year — and into 2022 — but customers don't always understand the obstacles they're facing, said Dusty Hutchison, president of the Central Oklahoma Home Builders Association.
"A real downside of this has been customer satisfaction at the end of the project," said Hutchison, owner of Alder Fine Homes. "While we do everything in our power to complete a home so clients can move in and begin to settle in, it is very frustrating for them to move into their home that in many respects is incomplete.
"Building a home is a dream for most, and when that living room light fixture you’ve pictured for months has not arrived or when you have to use a temporary refrigerator because of production delays, those frustrations may begin to build up and the builder is the one who it reflects poorly on."
Hutchison said that providing "the absolute best product" for buyers "is nearly impossible" right now because of supply shortages.
"We are doing our best to set realistic expectations, but those do fall short when the moving trucks start to pull up," he said.
Top builders still put up strong numbers in 2021
Ideal Homes & Neighborhoods, based in Norman, had the best year of its three decades in business, said Erin Yarbrough, director of marketing. Ideal closed sales on 550 homes in 2021, she said.
"I don't think anyone could have projected quite how much demand would continue into 2021 from the previous year," she said.
Not that it hasn't been taxing.
"We feel extremely fortunate to have such an incredible team that has doubled the size of our company since 2017. It’s required a lot of creativity, flexibility, and teamwork to continue to offer high-quality homes that are both beautiful and energy efficient when supplies are as hard to get and costly as they’ve been over the past year," Yarbrough said.
Oklahoma City-based Homes By Taber closed on 873 homes in 2021, which was 20% more than projected and 24% more than in 2020, said Lindsay Haltom, director of marketing.
Haltom said Homes By Taber saw such success, despite so many challenges, by shooting straight with customers.
"Even though supply chains are strained and labor shortages are prevalent, we continued to be forthcoming about pricing so customers had confidence in what they were paying, even guaranteeing the prices and locking the price in at the time of contract, while also guaranteeing close dates for customers to allow them to accurately plan their moves," she said.
"There are only 1,488 listings in Oklahoma, Cleveland and Canadian counties. Buyers are still competing with cash investors. We need more inventory," Allen said Friday.
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