Photo: House on Main Street, Tulsa. By Dennis Leech.
Last night, a federal tax credit for home buyers expired. The government had hoped that the credit would increase home sales, and if you look at the news in Tulsa, you’d think the program worked. “Tax Credit Ends Tonight: Real Estate Offices See a Rush of Activity,” trumpets one article in Tulsa World. We love to see news like this, because it plays to our hopes that Tulsa’s economy is recuperating. The only problem is that the news may not be real.
Let’s take your house (or your parent’s home), for example. Say it sits on a nice little lot in Midtown Tulsa, a lovely little place with a red brick facade. You value it. Sure, you’ve got a rough idea of your home’s worth because you’re in a certain neighborhood where all the homes sell well. Or so you think they’ve been selling well, except for that one monstrosity down the block that’s outrageously overpriced. But if you needed to sell your home, you could probably make a few dollars on it. You’re happy, because you live in a great city, right?
You’re right about one thing: you do live in a great city. In the past few years, Tulsa enjoyed a couple of appearances on “best city” lists, from Money magazine to Forbes. But you also live in a great city going through a great problem. If you’ve been paying attention to real estate agents and banker’s reports, you probably think your home is worth more than ever. Take a look at this article that was cheerily posted to the Tulsa Business Journal about a month ago:
“Tulsa’s housing market took another step in climbing out of its winter slump last month. Fueled by motivated buyers and positive weather conditions, housing starts in the Tulsa MSA received a boost in February, increasing by 55.6 percent over January totals, according to the Home Builders Association of Greater Tulsa.”
Even more recently, the Tulsa World reported that:
“Local home sales could be poised for an even stronger April as pending contracts — an early indicator of what the next month’s sales could be — hit 1,284, well ahead of pending contracts in February and March. Hodgson said he’s optimistic that home sales will remain strong in the near future, though he is concerned about what will happen after the tax credits expire.”
It’s important to note that in the above TW article, the data is provided by the Greater Tulsa Association of Realtors–people with a vested interest in the real estate market. But if you take a look at some surrounding numbers elsewhere, you might feel differently about the housing market.
As of April 2010, the online real estate database Zillow.com (1) showed that 1 out of 4 homes for sale in Tulsa are in foreclosure. While the data suggests that median home value is indeed on the rise for Oklahomans, Zillow’s reporting also revealed that April 2010 marked a 10-year low in home sales. Tulsans only sold some 344 homes–a 10-year low (a good month brings nearly a thousand home sales). Now take another look at the TW quote above, and you’ll realize that the data they’re referencing only pertains to “pending contracts” and not actual sales.
Market analysis from groups like The Campbell Survey suggest that the amount of distressed real estate in Tulsa’s housing market will begin bringing down the prices of homes–this in a time when homeowners are hard-pressed to turn a profit.
Ten years ago, for example, only 2 percent of Tulsans lost money on the sale of their home; today, that figure has risen steadily to 17%.
According to Zillow, you’re not likely to sell your home soon, and if you can sell it, you stand a good chance of losing money on the deal. The pattern’s pretty consistent for all of Oklahoma.
It will take some time and analysis to see if the federal tax credit for homebuyers actually worked, or if it simply slowed a terrible housing trend. But in the meantime, I think we’d all appreciate a bit of realistic reporting on the topic.