NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI). The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway. The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health. The three are employment, house prices and single family housing permit growth.
For the seventh release 101 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Tulsa, Oklahoma metropolitan statistical area (MSA).
The health of the Tulsa housing market is due to a well diversified economy based on aviation, machinery and electrical equipment manufacturing, energy and energy services and its position as a large regional healthcare center. Tulsa also benefits from the University of Tulsa and Oral Roberts University and the Tulsa Port of Catoosa; the most inland river port in the U.S. with access to international waterways. Tulsa is also home to an American Airlines maintenance base at Tulsa International Airport which is the city’s largest single employers and the largest maintenance facility in the world. Finally, Tulsa is headquarters to the Dollar-Thrifty Automotive Group, and many oil and gas related firms including the Williams Companies, SemGroup and Excel Energy.
According to home builder Glenn Shaw, owner of Shaw Homes, Inc., “the combination of a pick-up in oil and oil services, the continued growth of healthcare, and people generally feeling better about the local economy and secure that their paycheck will last for a while longer is invigorating buyers.” He went on to say that “because inventory is low and there is little to choose from, buyers can now sell their existing homes causing both the move-up market and the move-down market to do well.”
Comparing 2010 American Community Survey data for Tulsa to the US offers strong evidence that Tulsa is doing well and some insight into why. The unemployment rate is almost 22% lower in Tulsa than in the rest of the country, while the labor-force participation rate is slightly higher and the average age of the population slightly lower. In addition, the percentages of persons employed in natural resources, construction and maintenance occupations is about 20% higher than the national average as is the number employed in manufacturing. Because the local economy is doing well, the number of vacant housing units, be they owner-occupied units or rental units, is 14% lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 67.1% versus 65.4% for the nation. Lastly, the number of persons with high school diplomas, with some college, and with associate degrees is consistently 5% higher than for the county as a whole.
According to Jeff Dunn, President of Millcreek Lumber & Supply Company, “Tulsa is doing well partly because we missed the real estate boom of the first half of the decade and thus do not have that many foreclosures or defaults or buyers who have lost money on their home. Another contributing factor is the increasing importance of energy.” Whatever the cause, house prices are definitely on the mend. Prices are up 4.9% since the trough in February 2011 and are just 4.4% off their peak set in November 2009.
Improving economic conditions have resulted in payroll employment being down just 4.0% from its high in September 2008, and up by 3.9% since the trough in February 2011. Single family permitting activity is up 1.6% on a seasonally adjusted monthly average basis from the trough set in October 2010. While new homes are being built in many parts of the Tulsa MSA, activity is now primarily centered in the Cities of Bixby, Broken-Arrow, Jenks, Owasso and Tulsa all of which are in Tulsa County.