About Cleveland County, OK

Ben Bernanke the Fed chief spoke today in Austin and announced that the Federal Reserve would target long term rates. This with the announcement that the recession started a year ago, and consumers didn't buy enough this weekend, caused the stock market to sell off and long term bonds to go to incredibly low yields. This normally would jump start the housing industry, but as we all know, these are not normal times. Today conventional rates for a 30 year fixed rate mortgage were at 5.5% conventional, and 5.375% FHA, with all signs pointing to even lower rates possibly below 5%. Let's break this down for the Oklahoma market, and analyze what may happen as we go into 2009.

First Time Buyers

The average age of a home buyer is around 28, or as we like to call them Gen Y. These are the easiest people to convert because they are not burdened with a home in the first place. in Oklahoma City, Class A apartments are running at 97% occupancy, and it is not unusual to see a top drawer 2 bedroom, 2 bath unit renting for $875 and up. Some of the apartments have detached garage areas that can add $200 a month more to the lease. With new home builders discounting their properties, that same buyer can get a new home, condo or a town home for less monthly expense even at $160K, plus with a tax deduction for interest and property taxes, it becomes even cheaper. These buyers can get more space, upgraded interiors, and attached two car garages that give them more room to move and a yard for the dogs. This group can be persuaded to make changes because they are more open to change. We should see an uptick in numbers for this group.

Older Existing Homeowners

This is a group that have a home they have made comfortable and personal. Because of the stability of the Oklahoma City housing market they have also preserved their equity. It would seem natural that if their home is under $200K that with an absorption rate below 6 months on existing inventory and above $200k with enough inventory to make it a buyers market, normally we would see this as a "no brainer" for those people to move up of rates and the ability to get a good buy. I believe i said before these are not normal times. To get these buyers move you need to more Sigmund Freud than Adam Smith. These folks are just plain scared. They watch CNBC nightly and hear of the mighty U.S. becoming more like Uruguay. Things are bad but pundits make there money on sensationalism. Actually in Oklahoma City if these people have a house under $200K they are in the best position to buy I have seen in the last 10 years. First, under $200K in the suburbs like Edmond are selling fast and in some categories only 3 months of inventory is on the market. Then if they buy form $200K to $350K the numbers work strongly for the buyer. The key is to look for the long term. Selling high and buying cheap is a great formula for wealth building. The key as Realtors is to be able to show the statistics to back up the psychology pep talk.

Refinance

Here we have the real winner. With rates going below 5%, this will save the bacon of many homeowners on the edge. These owners we want to be able to refinance because if they default that is a drag on the market. Hopefully they will resist the temptation to cash out also, because that is a scary scenario. If they have the self discipline to pay off then tear up their credit cards okay. Getting rid of high interest loans is always a good idea unless it becomes another spending spree in the making. All that does is hasten the foreclosure process.

Choose a knowledgeable Realtor

This sounds like a stupid statement, except I see people working with no nothing Realtors all the time. This is not the time to work with someone who does not have the ability to evaluate the market, and understand how to do functions for you like absorption rate, or is first class in marketing your property. It is also time to trust the knowledgeable Realtor. When they give you the right information about your homes value, and you would rather listen to a Realtor who will tell you anything to get the listing including a pie in the sky price, run like the wind. This is the time for honesty not greed. This is the only reason to pay a commission, otherwise stay in the home you are in. Now is the time to make your financial security better for the long term and nothing is worth jeopardizing that.

This Thanksgiving I have lots to be grateful about, but I thought I would hit the highlights. Hopefully this will get you in the mood to create your own list. There is plenty we can be negative about, not just in these perilous times, but always. I don't highlight family and friends becasue we should be gratful every day for that blessing. Today to use the Monty Python song, "Always look on the bright side of life"!

The Election

As a 60 year old man I would have never thought that this country would elect a black man as President. First, it shows you that for all our problems, there is a deep goodness and an openness to change in Americans. It can also show grace as exhibited by John McCain's concession speech that was deeply moving and his best speech of the election.

The iPhone

Before I came to Houston for cancer treatment I wanted to give myself a present, and the iPhone is wonderful. The down loadable apps give me traffic problems, the restaurants and more around me, the ability to hear a song and to find out who it is, and the complete works of Shakespeare all for free. The Google earth free app is worth the purchase of the phone. The computer just got smaller.

Gas Prices

I know that as an Oklahoman in an energy state i should want high gas prices, but can you imagine the misery of a financial meltdown and $4 gas? This is the biggest tax cut incentive plan that the American people can have. Just filling up for $30 and not $50+ is a psychological boost.

Sheila Blair of the FDIC

President-Elect Obama should return her. Her workout package of IndyMac was genius, and her recommendations on how to handle the housing crisis was genius. Finally it looks like the Bush Administration got the message and the Treasury is dealing with toxic mortgage assets, and money will flow again.

Oklahoma!

Not the musical but the state. Finally Oklahoma and my city of Oklahoma City is the place to be. With a diversified economy, energy and agriculture, a robust housing market that is still going up, and Indian Tribe corporations that are making brilliant investments outside of casinos, the state although affected does have a distance from the economic plight of the country.

Political Satire

Tina Fey, Colbert, and The Daily Show gave me reason to smile. National elections have a meanness to them, and sometimes it's hard to separate truth from fiction, but the purpose of satire is to put meaning in perspective, lets us laugh at ourselves, and often speaks truth we need to hear.

MD Anderson Cancer Center

As I write this in my apartment a mile from the center, my thoughts, prayers, and tears are with the Doctors, Nurses, and staff of this miracle in a building. I came to MD Anderson with what I thought was a death sentence, but through these caring people and great medical technology, I am leaving cancer free. The fact that I can breathe, smile, and live gives me the ability to give to others. The first thing I will do when i get home is open a chapter of a head and neck cancer group so that I can give comfort to others who are diagnosed. This Thanksgiving please remember those who come hear every day. Some will not live but many more go home like me. Please also consider giving to Stand Up to Cancer. It is one thing to treat cancer, but it equally important to work on prevention and ways to help the body heal itself instead of chemo and radiation. I wish you Happy Holidays. Please share with me what you are grateful for.

I listened to a statement by John McCain that Fannie Mae and Freddie Mac were the beginning of the end for our current economic malaise. Certainly the housing crisis is the first of the many economic problems that has surfaced, but more is on the way. The current margin calls on Wall Street has taken down important CEO's as they had to sell stock, and it was recently announced that 10% of all credit card balances will not be collected. Obviously we have tremendous problems worldwide, and more has to be done beyond 700 billion to bring confidence to the banks and financial firms. Since the housing problem is from and center, and since I don't pretend to be a famous economist, so let me stay with my area of expertise, real estate.

The states where most of the overheated real estate prices came apart have more than just dropping home values to look for. Areas like Southern Florida, Nevada, and California are also experiencing higher levels of unemployment. All this adds up to lower revenues, less services offered citizens, and when combined with higher interest rates at present, this becomes a lethal combination that works together to drive prices down further. Even though prices in places like Florida have seen 40% to 60% drops in prices, believe it that prices should fall further based on the economic method of appraisal. At the time home prices in areas like this are running 22 times rental prices. The national average for the last twenty is 15 times the rental average. This would support another 15% drop in value. What happens then? With dramatic changes in guidelines for appraisal and mortgage qualification will help keep prices flat. So if you are investing in real estate where do you go. I know I am biased but Oklahoma should be a top choice.

Besides bias it can be helpful to point out a few statistics. Oklahoma City MLS listings show that only 6% of all listings are distressed property. Compare this to the over 50% of all listings as being distressed in Los Angeles, Las Vegas, Cape Coral Florida among others and you see an obvious contrast. next look at rental prices. In a study of the over 500 rental homes I have sold show a 12 times to value price ratio. If the long term national average is 15 times then if you are looking for an undervalued market, then Oklahoma City fits the bill. I have seen a dramatic drop in my stock and fund portfolio, but every property I own has positive cash flow. The Federal Government shows that the first half of 2008 has Oklahoma leading the nation in the rise of the average price of a home sale. Bias is always okay when you have facts to back it up. Stable prices with upward mobility and positive cash flow is a safer way to build up your income and retirement. We have both residential and commercial investments, so fill out a form on this site with what you might be interested in and we will reply. It hasn't always been this way but for the last five years it has been good to be in Oklahoma and that is still going on.

A new era begins Wednesday in Oklahoma. Our new NBA team starts playing in the Ford Center. I have linked an excellent article about how this happened from The New York Times. It points out that The Thunder will not make a huge financial impact on Oklahoma City especially in light of the 20 Billion that Devon and Chesapeake Energy Companies bring to the state. It does point out that Oklahoma City is the new role model for the NBA. As someone who grew up in Oklahoma City I completely understand David Stern's reasoning. Oklahoma City in the 1950's and beyond has been a cultural and intellectual wasteland. One of it's chief industries was telemarketing. Why? The high divorce rate caused a fertile recruiting ground for low paid single mothers who could work on a flex time schedule. As the article points out, The Murrah Building Bombing caused a unification of the city to recreate it into a new identity so we wouldn't be the city of domestic terrorism insanity. The unity crossed economics, race, and geography. We funded the two MAPS projects that revitalized downtown Oklahoma City and the Oklahoma City school systems. We expanded out airport for more direct flights that appeals to business men who want to relocate, and we created an empowerment zone that gave significant tax breaks to companies like Dell Computers to come to a lower cost market with a capable work force. Our housing market is still stable with only 6% of MLS listings being distressed properties. However, we can still become complacent. The resurgence of the energy industry that flourished until 1982 has brought incredible wealth to Oklahoma is softening. Some predict oil going down to $45 a barrel and natural gas which has gone up in inventory to also slide. We did the above things to not be dependent on energy. We have a lot more work to do to go from an emerging city to a vibrant city that has a balanced economy. As I previously blogged, when I go around Houston shopping I realize that a CEO's wife is going to tell her husband about what she likes to do that is better in Houston than our city. When we went to Whole Foods yesterday not only did we get better good in one place, we also got vitamins, aloe juice, and supplements that i would have to go to a health food store for in OKC, and bread that only a Oklahoma City bakery could satisfy me with. My apartment is in walking distance from five significant museums, IMAX theaters, three parks, and bike trails. We are moving in that direction but we need to pick up the pace. One professional sports franchise does not transform a city although it is a major accomplishment. Higher pay for our teachers, changes in liquors laws to allow even Walgreen's to sell wine which is a convienience, having more amenities to attract business all create jobs that increases consumer spending that brings in more jobs. Although Starbucks is not the factor it once was, when Seattle based Boeing moved to Chicago instead of Dallas there were obvious factors like the flight schedule from airports, office vacancy rate, but the number of Starbucks locations was considered in the process. It was not that quality of coffee made the difference, it was more an indicator of what this showed was beyond the obvious factors. Out anti-intellectual, anti-growth s has diminished, but it has not gone away. It is time to push down on the accelerator pedal to go to the next level. Go Thunder!!! Go Oklahoma City!!!

In 2012 Devon Energy will light up the Oklahoma City skyline with a 54 story Tower. The appraised value of the building is 750 million dollars. Back in the 1990's when we did the initial MAPS(Metropolitan Area Projects) that infused the first 350 million dollars for downtown renewal with a one cent voluntary sales tax could we have expected another 2.5 billion invested in downtown, then this. "it's a big deal" was the understatement by Brett Hamm, the President of Downtown Oklahoma City Inc. 7.5 million dollars in extra annual tax revenues will flow into our coffers just from this building. It will be the tallest building in Oklahoma. Larry Nichols, the visionary head of Devon Energy will also put money into the creation of a new downtown park, and other funds will be used for overhauling the Myriad Gardens as well as improvements to the neighborhood surrounding the Tower. This will also have an affect on bringing up property values around it. The Tower will create TIF (Tax Increment Funding) to do the park and other non-profit downtown projects. With the Devon Tower and the master plan community surrounding the Chesapeake Energy Campus, both of the huge independent energy companies are transforming the landscape of the Downtown and Northwest Oklahoma City areas. Both of these companies have put an extreme emphasis of not only creating hundreds if not thousands of high paying jobs, they are also contributing to the quality of life in our city, and backing cultural events and centers that we can be proud of. It is gratifying that when I have investors come in from other states and other countries, that when they see Oklahoma City with fresh eyes, they marvel at the progress, the many construction projects, and see what i see, a great place not only to live, but a great place to invest in both residential and commercial real estate. As a native Oklahoman, I will live to see this magnificent building, and the most important American Indian Cultural Center on 360 acres completed in the next four years. We will be able to point with pride that no longer will we be just known for the terrorist attack on the Murrah Federal Building, but like the fabled Phoenix, a city that rose above tragedy to show that when people come together in Harmony and singular purpose, the best is yet to come. Please come and visit and let me show you around. It will be my privilege.