B.A. Developer Joe Robson Goes National
By DAVID JONES
Contributing Editor
LOOKING AHEAD: Joe Robson, soon to be the president of the National Association of Home Builders, says the recent national housing problems are restricted to a few markets and that the Tulsa area is doing fine.
DAVID JONES for GTR Newspapers
“Real estate,” says Broken Arrow housing developer Joe Robson quoting an ancient industry bromide, “is local. It’s great to be in Tulsa.”
Robson, who has spent the last few years primarily developing housing projects surrounding Forest Ridge Golf Course in Broken Arrow, is fully qualified to take a look at the greater Tulsa, Oklahoma, national and international housing situation. On Jan. 1, 2010 he will become president of the National Association of Home Builders, based in Washington D.C. The National Association of Home Builders is a trade association that helps promote the policies that make housing a national priority.
He is well aware of the publicity surrounding the reported collapse of the American real estate bubble. He acknowledges there are serious problems. Yet, he says, what the public doesn’t understand is that if real estate is local so are its problems, although local problems can spill over into the country as a whole.
“There are about seven states where there is a housing depression: California, Florida, Michigan, Maryland, Virginia, Nevada and Arizona. Of those, Michigan has its own unique set of problems because of the lagging auto industry in the state and the drag that places on the whole economy.
“The others had a high amount of speculation, but even in those states there are areas that are doing very well.
“Think of the national real estate market as an upside-down pyramid. Those seven states represented 40 percent of new construction in recent years and are now overbuilt, fueled by easy credit and speculation. Sixty to 80 percent of the construction in those markets was by national builders who are traded on one stock exchange or another. When you have a severe downturn in those markets, you get huge negative numbers on the national picture as well as dramatic declines in housing company stocks.
“Tulsa, and similar cities like Wichita, are not part of that scenario. They have continued to have a good, steady market and do so to this day.
“Nevertheless the national picture cannot be ignored. Housing makes up about 16 percent of the Gross Domestic Product (what is produced and consumed in the United States), and when you have a large downturn on a national basis it has a big effect on the economy.
“It is possible you can have a major downturn and still leave markets like Tulsa virtually unscathed. The houses in Tulsa increased in value a little over six percent in 2007.”
So what has been happening? Why all the talk about a bubble bursting?
“Part of it was a relaxation of the rules on making a loan. Loans became available to people who in previous years couldn’t quality.
“I was in Vail, Colo. a few months ago and when the cabbie who was driving me found out my profession he said he owned four houses himself. I looked at him and his cab. I know how much a house costs in Vail. I was wondering how a cab driver could afford to own four houses in one of the most exclusive communities in the country. He financed them with no money down and no income verification.
“People with money wanted to invest in real estate. Easy money, not demand, was creating an oversupply of housing.
“The system failed largely because so many people were making commissions selling mortgages to the next guy and nobody was paying attention to just what was being sold. A condominium in Florida might change hands three or four times between the moment the plans for it were announced and the time it was ready for occupancy.
“The easy money that fueled the boom is gone. Investors are looking elsewhere. It will take time for the affected markets to work through the glut in housing.”
Robson thinks that there are still some things the government can do.
“Federal Housing Administration regulations need to be reformed. The FHA provides government guaranteed mortgages, but their loan limits are not adequate in today’s markets. Where else can people get financing for entry-level housing?”
Despite the gloomy headlines, Robson sees an improving situation for the housing industry.
“Our chief economist at NAHB predicts we’ll be coming out of this late this year. There are already signs that things are beginning to change, even in spots that have been hit pretty hard.
“Much depends on things beyond our control. Do we go into a recession? How steady will the job market be? What will happen to interest rates?
“On the financial side we have major work to do to bring confidence back to the market. Buying a house is still one of the great investments to you can have.
“Looking at the long term, say 20 years, I think the outlook for the housing market is good simply because of the nation’s population growth. When you see gloomy housing headlines, just remember that national stories may have no relation to what the local market is doing.
“It’s a good time to be in greater Tulsa.”
Updated 03-24-2008
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