Oklahoma incomes trailing home price hikes

By Richard Mize

Published: February 14, 2008

The divide between the haves and have-nots in housing persists in Oklahoma, according to a study released this week by the Oklahoma Housing Finance Agency.

The study points up a reality often lost in talk of the housing market: incomes aren't keeping up.

In Oklahoma County, for example, a wage of $18.40 per hour would be required for someone to buy the average-price home, which the agency calculated at $150,297 using Realtor sales data.

A wage of $11.29 would be required to rent the average apartment in Oklahoma City, a two-bedroom unit going for $587 per month, the housing agency said.

That leaves people working in several sectors unable to either buy or rent, including those in food service, health care support, building and grounds maintenance, personal care and farming-, fishing- and forestry-related jobs, the agency said.

"Even though Oklahoma has some of the most affordable housing in America, many wage earners cannot afford to own a home or even rent one without paying an unreasonable percentage of their income,” said Dennis Shockley, agency executive director. "Two wage-earners in the family are often required.”

Not all occupations are falling behind, the study shows.

"Those working in office and administrative support or production occupations such as bookkeepers and butchers can often afford to pay rent but not a mortgage,” the agency said in a news release.

The disconnect wasn't terribly surprising to David Feisal, senior vice president of Tulsa-based SpiritBank and immediate past president of the Oklahoma Mortgage Bankers Association. Federal labor statistics show Oklahoma trailing every border state but Arkansas in income, he said.

"Since loan approvals are based in part on debt-to-income ratios, lower incomes obviously affect how much house a borrower can qualify for,” Feisal said.

Relatively low earnings are met with relatively low rent rates in Oklahoma, said William Forrest, multifamily property specialist, first vice president and managing director of CB Richard Ellis-Oklahoma in Oklahoma City.

"I wonder how the same categories would match up in other states. My guess is that affordability is worse in more states rather than better,” Forrest said. "I think the point is to support and encourage the availability of affordable rental housing in the state.

"I would like to see more mature rental properties properly renovated and placed in affordable programs as it would also help in stabilizing the tenant base and help improve the quality of life for those tenants and the surrounding neighborhood, as well.”

Oklahoma "definitely has a need that is not being met,” said Victoria Caldwell, a member of the board of directors of the Oklahoma City Metro Association of Realtors.

"This may be more of a political-fiscal question than a local real estate vacuum,” said Caldwell, an Edmond Realtor and co-owner of Dominion Group, which owns RE/MAX First in Edmond and RE/MAX Associates in Oklahoma City. "The problem we have is that new properties are not available in the bottom price range.

"We need to build more affordable housing. But people fight it in the ‘not in my neighborhood' kind of spirit. It is almost impossible build (houses with siding) or of lesser quality construction because nobody wants a ‘neighborhood like that' next to theirs in the newer parts of town,” he said.

The housing study is a jobs story, said Mike Means, executive vice president of the Oklahoma State Home Builders Association.

"We've got to do things to bring in the good-paying jobs, not just the telemarketing-type jobs. This is an indication of what we still have to do,” Means said from Orlando, Fla., where he and others in the home-building industry are attending the International Builders' Show.

It's no secret that rising home construction costs are outpacing income gains, said Jeff Click, vice president of the Central Oklahoma Home Builders Association.

"I sold the first house I built for $114,900, 10 years ago. I couldn't build and sell the same house today for under $180,000, and that's just four blocks away,” Click said. "... You can attribute that in part to an increase in the cost of raw land and development, coupled with the dramatic climb in costs of nearly every type of material that goes into building homes. Builders and suppliers both feel the squeeze in this chasm of affordability.”

Means quibbled with one of the housing agency's figures. The OHFA said 30 percent or less of a person's salary going toward "housing-related expenses” would be "a reasonable percentage.”

The traditional recommended range for all housing expenses is 35 to 38 percent of income, Means said, with 28 percent the recommended top limit for a house payment alone.

The housing finance agency conducted the analysis of 72 of Oklahoma's 77 counties using data from the U.S. Department of Housing and Urban Development's, the Oklahoma Association of Realtors, the Greater Tulsa Association of Realtors and the Oklahoma Employment Security Commission. Insufficient data for Beaver, Cimarron, Ellis, Harper, and Texas counties prevented a full statewide analysis.

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