If you don't live downtown, why not?

[betts]

I have no problem with quality housing options at a lower price point. One of the things about living downtown is that it's pretty unreasonable not to expect all different types of housing/commercial options around. Unlike people who want to live in gated communties with people and houses just like them and theirs, I am very happy having a wide range of people and housing types. I just think that people who say the current housing options are overpriced should rather say they're not within their price range. While I wouldn't mind if the owners would cut the prices here a wee bit if it would get more people to live here (thereby eventually raising my property values, most likely), I feel that my house is priced fairly accurately for what I have.

The Lofts are selling pretty well, I think, too. I believe there were 7 closings in December and at least one already this week. There have certainly been increased sales at the Hill as well, and I believe I heard about some closings at Block 42 recently.

[flintysooner]

Not surburban prices, but urban prices tailored to the OKC market rather than someplace such as Dallas or Houston. Builders are entitled to make profits from their labors, but why should the margins be so much higher downtown as opposed to in the Deer Creek area?

And it isn't price, it's value. A home for most people is their largest investment. There are a lot of eggs in that basket, so most folks would be loathe to pay an amount of money so great that it's almost inevitable that their investment will be toast in a few years. And that's likely to happen. I can't imagine that as more inventory comes on line that these $250-$300 sq. ft. prices for existing structures will remain.

What's being said is that the prices should be market appropriate. And they're really not. Heck.. in Dallas, Q3, 2010, the average price/sq. ft. of downtown condos was only $180. How can we justify the prices here when that's the case in Dallas? True, they have a lot of existing inventory compared to us--which might be a cautionary tale if you plan to be an early adopter in OKC.

Midtowner, I've come to appreciate your serious and thoughtful posts but it must be pointed out that suburban, residential prices vary widely. The cheapest prices of which I am personally aware in the metropolitan area is about $73 per sf for new construction. For better quality in more desirable areas it is not at all uncommon to see $135 and up and that's for stick without tremendously expensive upgrades. For more custom construction it is easily possible to spend two or three times as much without even approaching ostentation.

In our area we have successful developers and home builders who have learned through experience what will sell, meet customers' expectations for the most part, and still remain in business themselves.

There isn't that kind of experience and expertise yet for the downtown area. That will develop with time and eventually there will be different price levels and so on.

[Midtowner]

There isn't that kind of experience and expertise yet for the downtown area. That will develop with time and eventually there will be different price levels and so on.

Well, the trouble is, what little land there is, folks are either sitting on waiting for it to somehow magically appreciate, or they have received the land from OCURA and have already developed it and have either (in a couple cases) totally sold out their inventory at the $200-$300 price they sought or in the case of other homes, developers appear to be holding out hope that magically, buyers will appear at the prices requested.

I think the price tag is the big hindrance here. So if you know, what sorts of margins do developers expect in suburban development? What sorts of margins have they realized in urban OKC development? What explains the price discrepancy in the average urban price for Dallas versus OKC (with OKC being nearly double the price of Dallas)? I think developers should make lots of money here, but if their profit demands, in many cases, made possible by a public entity (OCURA) are holding downtown OKC back, we need to take a look at how future OCURA lands are parceled out to not repeat these mistakes.

[flintysooner]

So if you know, what sorts of margins do developers expect in suburban development? What sorts of margins have they realized in urban OKC development? What explains the price discrepancy in the average urban price for Dallas versus OKC (with OKC being nearly double the price of Dallas)?

Mostly developers haven't fared very well in the recession. In a good year though a range of 5% to 15% margin before tax would be considered extremely good. Home builders, according to a 2009 NAHB study, make 8.9% on average before tax and owner's compensation.

But neither home building nor land development would be a very good bet right now. The risk is huge, too, in case I failed to mention that.

Basically the way land development works here in Oklahoma is that a developer either owns a piece of land or acquires the land. He finds a lender willing to work with him and borrows about as much money as he can to put in the utilities, streets, detention, and any amenity features he finds necessary. Of course there are the normal soft costs of legal, engineering, interest during development, insurance, brokerage fees, and so on. Usually the loan covenant will allow the developer to very little, if any, money out of the initial lot sales until various memorials are achieved. Eventually if he's lucky, or astute perhaps, the developer begins to pocket some money and at the very end he collects whatever profit may remain.

Now developers who also choose to build the homes or builders who choose to develop are a little different and considerably more complex.

I really don't know about the Dallas market now except that it has been hit very hard by the recession. There's probably a lot more desperation selling going on there than in Oklahoma City.

Fortunately we in Oklahoma City really have not felt much of the recession that has been ravaging the rest of the country.

[dismayed]

Excellent post with accurate information and astute conclusions.

In my opinion there are far too many in Oklahoma City, including some who post on this forum, who award first place to cheap prices in nearly everything including housing. When something is built to exceptional quality standards the complaints about price are the first and loudest.

Since you are replying to Betts who is replying to me, I would like to respond. You might be right in a lot of people's cases, but you are wrong in mine and with respect to my post. I realize I could not get anything my current house's size downtown, and that something of that quality would cost me at least double in a downtown condo. This isn't about cheap, this is about bang for the buck. I don't care how well-constructed downtown condos are, I am not paying the amounts they are asking when there is so relatively little going on down there and when it is so clear to me that, if I suddenly had to move, that the condo would quickly become a boat anchor.

If developers really want to attract people, then let me make a suggestion: build a lot more commercial sites down there in close proximity to the housing. Make sure every single new housing development comes with retail site plans for the ground-level development. And give those retailers a break to entice them in, at least initially.

I am so sick and tired of people claiming this is all about cost. It's about bang for the buck, which is different. You know what I want to see? I want to see a place that I might live in actually have restaurants and unique stores located in the ground floor instead of... oh I don't know, how about yet another law firm. Every single time someone tries to open up some commercial areas downtown that is ALWAYS what happens -- people keep leasing out to businesses that are of no consequence whatsoever to folks who would be living in those condos. Now I realize that people are going to lease out to the businesses that come to them... but if none of the right kinds of businesses are coming to you what does that tell you???

I don't really think that the majority of downtown condo finishes are really that nice. I have friends that live in very nice condos in Los Angeles, Austin, Chicago, and Florida. I know what nice is. I'm not seeing it in the sub $800k range in OKC. In two of the four previously-mentioned places my friends are paying less than that for their condos, and they are surrounded by constant nightlife. Something is wrong with OKC's pricing.

[dismayed]

What's that vacant building on Walker that looks like it might be condos one day in the middle of Midtown? Something like that seems a lot more attractive to me than anything housing-related going on in Bricktown just from a closeness of commerce standpoint alone. Unfortunately it'll probably be low-end apartments when all is said and done.

[fokochang]

I live downtown, on ne 5th and lincoln. The best of both worlds, single family home with yard and quiet neighborhood road, + 10 minute bike ride to downtown, + 5 minute ride to OUHSC, +++ close to Bobo's, ++++ my house cost <50,000 for 1500 sqft. BOOM.

[dismayed]

I don't mean to sound aggravated, I am just really frustrated with OKC right now. I keep waiting for things to improve. And they do, at a snail's pace. Meanwhile, every time i visit friends in other cities things have changed radically between visits, and in a supposedly down economy.

[PennyQuilts]

I don't mean to sound aggravated, I am just really frustrated with OKC right now. I keep waiting for things to improve. And they do, at a snail's pace. Meanwhile, every time i visit friends in other cities things have changed radically between visits, and in a supposedly down economy.

Dismayed, could you give us some specific details of what you mean - without context, I can't see what you are comparing OKC's progress to. How far apart are the visits? I am not arguing with you because we may be talking apples vs. oranges, but I was gone 10 years and saw a TON of sprawl explode in the DC area in the suburbs, but next to no civic improvement. Just more houses. When I came back to OKC, there was a frickin' skyscraper going up and a Whole Foods on the way. The south side had exploded and the highway system was going great guns. The art community was way, way, way more user friendly and every time I turn around there is something else to get involved in.

[PennyQuilts]

I live downtown, on ne 5th and lincoln. The best of both worlds, single family home with yard and quiet neighborhood road, + 10 minute bike ride to downtown, + 5 minute ride to OUHSC, +++ close to Bobo's, ++++ my house cost <50,000 for 1500 sqft. BOOM.

Sounds like that worked out well for you - congrats.

[betts]

I don't mean to sound aggravated, I am just really frustrated with OKC right now. I keep waiting for things to improve. And they do, at a snail's pace. Meanwhile, every time i visit friends in other cities things have changed radically between visits, and in a supposedly down economy.

Developers develop where they think they can make money. Sometimes they're wrong. If your demographic were so desirable, or developers thought they could make a buck, they'd build something you're willing to buy. But you can't have it both ways: you cannot demand that restaurants and retailers buy or lease space in buildings you're not willing to purchase. There's a chicken and egg here: Someone has to take a chance. Either buyers have to risk and buy in areas that aren't developed yet, or builders and retailers have to do so. When neither is willing to do so, nothing happens. If you're not willing to take a chance, I'm not sure you have the right to demand a developer do so.

Meanwhile, those of us who live downtown feel we have a lot of choices. It seems like every month a new restaurant announces it's moving downtown. I have movies, the ballet, the symphomy, the art museum, the Thunder, the Barons, the 89ers, restaurants ranging from Red Prime and Ludivine to McNellie's and Earls. I don't have to have a restaurant directly beneath me, because they're all within walking distance. It could be better, but it's getting better every day and I'm having a great time living here.

[Rover]

I don't mean to sound aggravated, I am just really frustrated with OKC right now. I keep waiting for things to improve. And they do, at a snail's pace. Meanwhile, every time i visit friends in other cities things have changed radically between visits, and in a supposedly down economy.

That is interesting. I am involved in development/construction across the country and I am curious as to what cities you are referring to. OKC has more going on than most right now and for the last couple of years. So please identify which cities you are speaking of. Condo construction in downtowns have virtually come to a halt for the time being, so I am curious.

[flintysooner]

Since you are replying to Betts who is replying to me, I would like to respond. You might be right in a lot of people's cases, but you are wrong in mine and with respect to my post.

Sorry, dismayed, as I definitely did not mean to refer to you specifically or anyone else for that matter. I always read your posts and find your viewpoint interesting and worthwhile.

[flintysooner]

Just for the record I'd definitely either pay a premium to live in an ICF or AAC structure or make it smaller so I could afford it. That's something I definitely covet.

[dismayed]

That is interesting. I am involved in development/construction across the country and I am curious as to what cities you are referring to. OKC has more going on than most right now and for the last couple of years. So please identify which cities you are speaking of. Condo construction in downtowns have virtually come to a halt for the time being, so I am curious.

Why would you assume that I equate improvement to new construction? I actually prefer renovation and reuse of older existing buildings. And what is the point of being confrontational on this issue? I'm going to say Austin, then you're going to say well yes that is one of the few hot cities in the country but OKC blah blah blah... and then I will congratulate you for your brilliance.

[dismayed]

Dismayed, could you give us some specific details of what you mean - without context, I can't see what you are comparing OKC's progress to. How far apart are the visits? I am not arguing with you because we may be talking apples vs. oranges, but I was gone 10 years and saw a TON of sprawl explode in the DC area in the suburbs, but next to no civic improvement. Just more houses. When I came back to OKC, there was a frickin' skyscraper going up and a Whole Foods on the way. The south side had exploded and the highway system was going great guns. The art community was way, way, way more user friendly and every time I turn around there is something else to get involved in.

What do you want specific examples on, the snails-pace comment? Well for starters how about Bricktown commercial development. There was a great boom ten to twelve years ago that lasted three or four years of both building new construction as well as businesses moving into existing buildings, and then it just sort of stopped. There has been one Bricktown condo or commercial development after another since that time that has announced intentions to develop (pending financing), and then nothing more comes of it. I can't even count the number of times that has happened. Then about three or four years ago housing was announced and several big units were built from scratch, or partially built, and then things kind of stalled out there too. Yes I am sure the credit crunch and housing bubble have a lot to do with that. But you know it sure seems to me like even during the boom times OKC will be doing well, but then you go to a city just in our own region like Dallas or Austin and during the boom times they are building new skyscrapers, entirely new highways, new housing by the droves, new downtown condos, renovating old buildings for condos and restaurants, and it is never ending.

It just seems like we built up during the boom at a respectable pace, but everyone else everywhere else built up a whole lot more in pretty much every way possible. Look at your Whole Foods example... we are getting excited about our first and only unit. If we get more they will likely not be located in OKC but in the suburbs. Meanwhile other cities in our region already have them (and have for almost a decade) and have several locations. Some Texas cities are blanketed with them. It's kind of like Starbucks. From the moment I became aware of them, when the big coffee craze started in the 1990s, do you realize it was literally 10 years before they expanded into OKC? Another thing people are crazy for and always commenting on in this forum is Dave and Busters. Think of the place what you will, I'm just pointing out clearly a lot of people here have voiced that they would like to have one in OKC. Well look at how they are blanketed across Texas and all other states in the region, and how Tulsa already has one along with a Whole Foods. Now when did the big D&B craze start, and when did we get one announced for OKC? What do you know, 10 years. When did downtown developers first start talking about housing construction in Bricktown? When did the first new units actually become available? Wow, 10 years! What was the time period in which you moved away and come back and see the phenomenal growth? Ten years! Things just move at a snails pace here. This is not New York. I don't want it to be New York. But couldn't we just be a little more like some of our neighbors to the south?

[TaoMaas]

It's not quite downtown, but for what it's worth, there's been a "For Sale" sign this week on that modern house that's on NE10th St, just east of Lottie.

[Rover]

Why would you assume that I equate improvement to new construction? I actually prefer renovation and reuse of older existing buildings. And what is the point of being confrontational on this issue? I'm going to say Austin, then you're going to say well yes that is one of the few hot cities in the country but OKC blah blah blah... and then I will congratulate you for your brilliance.

Why so sarcastic?

I ask the questions I did because I get the construction activity reports (new, remodel and retrofit) on most cities in the US and am pretty aware of the levels of activities. I am also in the business of supplying contractors here and internationally. While construction hasn't ceased, there haven't been many totally new projects the last couple of years. So my question was legit and your answer pretty snide.

And yes, Austin has been an overachiever in this environment. We did several hotels and condo projects there over the last few years, and most recently were completions of projects started and financed prior to the economic downturn. There are always exceptions and they certainly have been. Retail construction, condo construction and office construction (new and remodel) is down by more than half of a couple of years ago, and many segments down 70% or more in most of the country. Sorry, but that's the facts. So I was curious where you saw the activity going. Sorry that offended your senses.

[jdcf]

About 3 years ago we started exploring the options of moving to a condo and preferred the midtown or deep deuce areas. Our son was then grown and out of the house, I worked in the vicinity, and we were frequently at the OU health sciences center for various reasons. We particularly liked living in an area that was very walkable - sidewalks and places to go.

At that time we did not have many choices in the up to $175K price range. We were less interested in size than in price (had to be), and in other cities we had even seen studio lofts that would have been great for us.

We are now in a small gated community in NW OKC. BUT, do I still regret not living downtown? Absolutely! We have a very nice house but no place to just get out and go.

Sidenote: We actually live in a single story duplex with small side yard and back yard. This works out nicely for our dogs. There seem to be many places in the city center area where this kind of development could occur. Surely there is demand as the population ages. I also think more dog parks are needed in the downtown area - not sure that what is planned at Myriad Gardens wil be enough or so easily accessible without a fairly long walk.

[shane453]

go to a city just in our own region like Dallas or Austin and during the boom times they are building new skyscrapers, entirely new highways, new housing by the droves, new downtown condos, renovating old buildings for condos and restaurants, and it is never ending.

I mean, technically every single one of those things is happening in OKC right now, happened at a faster pace around 2005-2008, and is about to happen at a faster rate again this year with a lot more projects getting built. Every city has developments that get stalled, and calling OKC slow because it is slow compared to Texas really is unfair when Texas is the hottest growth center in America.

[bluedogok]

I mean, technically every single one of those things is happening in OKC right now, happened at a faster pace around 2005-2008, and is about to happen at a faster rate again this year with a lot more projects getting built. Every city has developments that get stalled, and calling OKC slow because it is slow compared to Texas really is unfair when Texas is the hottest growth center in America.

There are developments stalled all over Texas and we have a bunch of "paper architecture" of development projects in the Austin area that were stalled because of the economic situation. In recent years we have had more uncompleted and stalled projects in the company than completed. Yeah there was a lot of development going on in Austin/San Antonio but there was much more that never moved forward and not just by our company.

[MikeOKC]

There are developments stalled all over Texas and we have a bunch of "paper architecture" of development projects in the Austin area that were stalled because of the economic situation. In recent years we have had more uncompleted and stalled projects in the company than completed. Yeah there was a lot of development going on in Austin/San Antonio but there was much more that never moved forward and not just by our company.

This is very true. Take North Dallas/Collin County. It's still doing okay (in fact booming compared to the rest of the country), but sooo many projects have been put on hold. Hotels aren't doing as well, business has slowed way down in just about every sector.

[cjohnson.405]

1) no
2) I don't live downtown for several reasons: I have 2 daughters and the school choices are pretty miserable, there is not alot of green space for children, $/sqft is high for what you get, IMO livable downtowns mean you can walk to restaurants and shopping - I don't see that in OKC, activities/concerts are spread widely over the metro area and IMO there is little benefit in staying downtown.

In my current phase in life, downtown would be unfair for my children and not worth the effort. I hope that by the time my children graduate from college, downtown will be vibrant and have alot more going on all of the time. I would definitely consider then.

[Soonerinfiniti]

I really don't understand the controversy regarding downtown living. It's not a conspiracy if you don't/can't live there. It is simple supply/demand. OKC doesn't have the population or employment to support a large downtown housing area. Furthermore, there is minimal affordable housing. Apartment rental rates in the area range from $1.00 - $1.38/SF per month. Deep Deuce has rental rates from $650 - $1,800 per month. When developers provide product that can adequately compete with these rental parameters, I think more sales will occur.

Two more quick things: Many college graduates can't find jobs right now and are likely scared to death of their future. That may be holding back residential sales of all kinds. Second, it amazes me that every developer took that 2005 downtown housing study that said 10,000 units were needed and concluded that 10,000 high-end units were needed. That is not statistically possible. Block 42 had first-mover advantage but remains stalled.

[betts]

New housing is rarely ever "needed". And, regardless of the price points, there is housing downtown selling for comparable prices per square foot to other developments in Oklahoma City and the suburbs. There are certainly plenty of people in Oklahoma City that can afford downtown housing at virtually any price and plenty of people working downtown with the income level to do so. The mistake was in thinking people with the money to do so would want to move downtown into the housing provided. Other cities had noted significant increases in interest in upscale downtown living and developers assumed that people here would too. Clearly, that's not the case, for whatever reason. Living adjacent to Rudy's Garage and the railroad tracks is certainly outside some people's experience and probably level of comfort. It's a risk and it's safer to buy in a development. Again, as the neighborhood is built up, I think there will be more people of every income level interested in living downtown, but we change our perceptions a little slower than people in other places, perhaps.