Newspaper article THE JOURNAL RECORD
Caution to Run Residential Construction for City in '88
Caution is the watchword for residential housing construction in Oklahoma City for 1988, according to Southwestern Bell Telephone economist Craig Knutson.
And, builders agree that 1988 will not be a banner year for residential home building.
While most buiders report an increase in their individual market share of homes built, problems with an excess inventory of homes, and a drying-up of potential new-home buyers, have effectively taken the place of hope of a strong recovery in residential home construction.
r. Hosgyih Chang of the City of Oklahoma City Building Permits Division expects building permits for 1988 to be flat. He expects no dramatic improvements over 1987.
"I don't think we've hit bottom," said Knutson. "I think we have a long way to go."
In a telephone interview, Knutson said that he did not expect to see any speculative building for the next year. He also said that custom building will be the only bright spot in new-home construction, and that builders should not expect to make money for "at least three to five years."
"We're just treading water," said Mike Shaddix of W. Ray Newman Homes Inc. Shaddix said he did not expect to see the residential construction market shrink, but he also said he did not expect to see profit for his company for the next three years.
Randal Erwin, who is division manager for Gemcraft Homes Inc., termed his outlook or 1988 as "guardedly optimistic."
"I have seen key economic indicators, which will ultimately be positive for the home builder," said Erwin.
The main factor Erwin points to is an improvement in employment trends from 1986 to 1987, which have reversed toward increased employment. Erwin tempers his optimism with an additional note of caution.
"I don't expect a major turnabout and I don't think we want one," he said. He stressed the state's need for " good, consistent, moderate growth." He also said an major increase in oil industry employment would be not helpful because such increases have not been long-lived in the past.
Erwin said that the excessive inventory of foreclosed homes on the market is a major headache for his company.
Knutson said that the excess of foreclosed homes on the market mean a better deal now that builders are ready to forego profits for a better market position. …