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May 27th, 2009 - McCaleb Homes

Industry Q&A with Caleb McCaleb

Many say they don't know what to believe with residential home valuations in this economy. Can you clarify what we're experiencing in Central Oklahoma? Have property values declined, and, if so, primarily where?

CM: According to the Federal Housing Finance Agency's latest report, Oklahoma City has held steady with less than 0.5% decline in the last 12 months. That is quite a feat compared with drastic declines in real estate in most parts of the country. I believe we were fortunate because we did not have the bubble/bust cycle this time around.

Is this a good time to invest in residential real estate?

CM: I believe we are near the bottom in the market. With interest rates at all-time lows, if you have some money for a down payment - the 0% financing days are pretty much nonexistent - now is the time to build great investments. Buy wisely for investment properties, though. Don't plan to fix and flip quickly.

What is the average going rate per square foot for residential properties compared to same time last year, two years ago?

CM: Prices vary widely throughout Oklahoma City, and even neighborhood to neighborhood. Over the last five years, we have seen cumulative appreciation in excess of 20%, according to the Federal Housing Finance Agency, and that has been flat for the past 12 months.

What can we expect with mortgage rates? And at what point is it the best time to refinance?

CM: As the federal government keeps borrowing trillions of dollars to finance this economic recovery, I believe we are going to see inflation return. And with inflation comes higher interest rates. If I was sitting with an interest rate of near 6% or more on my home, and I was planning on staying for two-plus years, then I would look at refinancing now. Make sure you lock in the fixed interest rate on the refinance when you make the loan application.

What metro areas seem more in-demand today?

CM: The hottest markets are the ones with the best schools.

What questions should a new home buyer be asking? And how much cash on hand should they have before considering a purchase?

CM: How long has the builder been in business - if it's a new home - and how does their warranty or after-the-sale care program work? They will need to plan to have at least a 3.5% down payment, plus prepaids. It's a good idea to get prequalified with a reputable lender before shopping for a new home. The free gift to first-time home buyers is the $8,000 tax credit that expires Dec. 1.

How much interest are you seeing in green homes?

CM: Caveat emptor: "Let the buyer beware." I would highly recommend hiring an attorney for legal issues and an engineer to assess structural issues that are common problems with foreclosures.

What metro areas seem more in-demand today?

CM: Green is the buzzword today. I think we will see more and more green products and green construction procedures in the years to come. I think most of us treasure our planet, and the question we need to ask ourselves is, "If not me, then who?" The National Association of Home Builders is finalizing its green certification program, and we will see a concentrated push to greener homes in this country.

What trends are we seeing in the residential market?

CM: Downsizing from the giant McMansion homes to a smaller, smarter cottage or bungalow-style home. People love the historical look of these craftsman-style homes with their inviting front porches that you see in Crown Heights and Heritage Hills in Oklahoma City. People love the feeling of coming home to Grandma's house, but with very open and livable contemporary floor plans.
I think it is a combination of the financial times creating more conservative investments, the desire to be greener by having a smaller carbon footprint and stunning new designs as architects focus on this emerging market.

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