Is Oklahoma City a good place to buy rental property?

If you want to invest in the heartland, Chicago is often the default choice because it is so big. Texas gets attention as the home to several of the fastest-growing and appreciating markets in the country. However, it is worth your time to look at smaller metropolitan areas that have similar potential without the same degree of risk. Let’s look at the Oklahoma City real estate market trends and forecast before discussing why you should consider investing there.

Oklahoma is one of the hottest housing markets in the nation. The market continues to be hot with homes selling faster than builders can build them in OKC. This is despite increased costs to builders, which lead to higher housing prices, a relative lack of homes, and rising mortgage interest rates, all of which make it more costly to own a home. The median home price is $252,950, up 18.4% from last year.

In the most recent annual population estimates released by the U.S. Census, Oklahoma City is now the 25th largest city in the United States, according to the latest annual population estimates released by the U.S. Census Bureau. Since 2010, it has grown by more than 12%. There was already a shortage of housing supply, then when the pandemic showed up in March, many sellers decided to take their properties off the market.

This drove supply down even more, but the demand remained high in the Oklahoma City housing market. According to Zillow, home values are up 17.5% year over year in Oklahoma while in Oklahoma City they have gone up 18.1%. Despite the rising prices, Oklahoma real estate is still highly affordable relative to most housing markets in the U.S.

If you've been thinking of investing or buying your first home in OKC, now could be a great time to act. Homeownership in Oklahoma is very affordable, as the median home price is still among the lowest in the nation. The typical home value in the Oklahoma City metro area is around $188K. There is no better time to enter the market to buy a home than there is right now as home prices are very low compared to other parts of the country.

According to SmartAsset, Oklahoma City has the most affordable housing market in the U.S. Oklahoma City homeowners and renters pay $916/month and median annual housing costs are only 19.81% of Oklahoma City’s median household income, which is the lowest percentage of income on housing costs in their study.

According to Demographia’s 16th International Annual Housing Affordability Survey (2020), the 10 most affordable major housing
markets are all in the United States. Rochester is the most affordable, and Oklahoma City & Cleveland are the second-most affordable housing markets. The survey includes housing markets of eight countries across four continents.

Oklahoma City Housing Market Trends 2022 (Most Recent)

According to the national property broker, Redfin, the Oklahoma City housing market is very competitive.

• Homes in Oklahoma City receive 4 offers on average and sell in around 4 days.
• The median sale price of a home in Oklahoma City was $265,000 last month, up 15.2% since last year.
• On average, homes in Oklahoma City sell after 5 days on the market compared to 5 days last year.
• There were 1,061 homes sold in May this year, down from 1,102 last year.
• The average homes sell for about 2% above the list price and go pending in around 4 days.
• Hot Homes can sell for about 6% above the list price and go pending in around 2 days.

Realtor.com's April 2022 data shows that Oklahoma City is a seller's real estate market, which means that more people are looking to buy than there are homes available. The sale-to-List Price Ratio was 100.5%, which means homes in Oklahoma City sold for approximately the asking price on average. The median list price of homes in Oklahoma City, OK was $265,000, up 15.2 year-over-year. The median listing price per square foot was $149. The median sale price was $250,000.

The following real estate statistics were collected by MLSOK, Inc., for the time frame May 1 through May 31, 2022. While information is deemed reliable it is not guaranteed. Looking at these trends, it's a seller's market in the Oklahoma City Metro Area.

May 2022 Residential Sales

HOUSING SUPPLY: New listings increased 20 percent for Single Family homes but decreased 15.1 Percent for townhouse-condo homes. Inventory increased 38.8 percent for Single Family homes but decreased 2.9 percent for Townhouse-Condo homes. The month’s supply of homes increased 44.4 percent for Single Family homes but decreased 8.3 percent for Townhouse-Condo homes.

HOUISNG SALES: Pending Sales increased 2.7 percent for Single Family homes but decreased 4.3 percent for Townhouse-Condo homes. Closed sales increased 0.5 percent for all properties.

MEDIAN PRICE: Median Sales Price increased 16 percent to $255,130 for Single Family homes and 5.2 percent to $142,000 for townhouse-condo homes. The price forecast for 2022 is also positive.

DOM: Days on Market decreased 9.5 percent for Single Family homes and 68 percent for Townhouse-Condo homes.

The slowdown in sales has provided a much-needed boost to housing supply, with inventory increasing 10.8 percent from the previous month, according to the National Association of Realtors (NAR), although supply remains down 10.4 percent from this time last year, with only 2.2 months' supply of homes at the current sales pace.

As the nation continues to explore ways to solve the ongoing housing shortage, estimated at 5.5 million homes, the Biden administration recently unveiled the Housing Supply Action Plan, which aims to expand housing access through a number of administrative and legislative actions and help relieve the nation’s housing crisis over the next 5 years.

Listed below are the Oklahoma City Metropolitan housing statistics for May 2022 as compared to May 2021 and April 2022. These statistics are also supplied by MLSOK, Inc.

Oklahoma City Real Estate Market Forecast 2022-2023

What are the Oklahoma City real estate market predictions for 2022 to 2023? According to Zillow, a leading real estate marketplace, the typical value of homes in Oklahoma City is $194,763. Home values have appreciated by nearly 73.8% over the last 10 years. Oklahoma City home values have also gone up 18.1% over the last twelve months alone.

According to NeighborhoodScout's data, appreciation rates for homes in Oklahoma City have been tracking near the average, with the annual appreciation rate averaging 4.64% during the period. During the latest twelve months, Oklahoma City's appreciation rate has been 15.83%, and in the latest quarter, it's been 6.50%, which annualizes to a rate of 28.66%.

Here's a short and crisp housing market forecast by Zillow for Oklahoma, Oklahoma City, and the Oklahoma City Metro. Housing inventory remains low in many major cities across the nation, and Oklahoma is no exception to that. According to their forecast, the supply and demand dynamics will likely push prices north again over the next 12 months.

This shows that Oklahoma City Area is a hot seller's real estate market. There exists a limited supply of homes, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

• Oklahoma City Metro or Greater Oklahoma City is the largest metropolitan area in the state of Oklahoma, and it includes Canadian, Cleveland, Grady, Lincoln, Logan, McClain, and Oklahoma counties.
• In the metro region, home values have gone up 18.3% over the past year.
• The Charleston housing market forecast ending with May 2033 is positive.
• Zillow predicts that Oklahoma City Metro home values may grow by 7.7% by May 2023.
• If this forecast is correct, Oklahoma City home prices will be higher in the 3rd Quarter of 2023 than they were in the 3rd Quarter of 2022.
• Oklahoma City home values have gone up 18.1% over the past year ($194,763)
• However, Oklahoma City real estate is still very affordable.
• Oklahoma home values (statewide) have gone up 17.5% over the past year ($178,378).

The chart below, created by Zillow, shows the growth of median home values since 2012.

Oklahoma City Real Estate Investment Overview

Should you consider Oklahoma City real estate investment? Many real estate investors have asked themselves if buying an Oklahoma investment property is a sound investment decision? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022 & 2023. We've already discussed the latest market insights and forecasts for 2021. They show a positive growth trend for next year and it is the right time to invest and lock in low mortgage payments.

Oklahoma City is home to just over 600,000 people. The metropolitan area is home to over a million people. The Oklahoma City housing market is stable to strong because it is slowly growing. In 2019, about 1.41 million people lived in the Oklahoma City metropolitan area. Here are the top reasons to invest in the Oklahoma City real estate market in 2021. Oklahoma City is the most populous city in the state of Oklahoma. From 2010 to 2018, Oklahoma City's metro population grew by nearly 14 percent and has experienced a 1.55 percent average annual growth rate.

Steady Growth in Oklahoma City & Its Property Values

The Oklahoma City real estate market is bolstered by steady population growth of 1% to 2% a year, both within Oklahoma City itself and the surrounding suburbs. This keeps housing prices and rental rates going with the rate of inflation if not better. However, it doesn’t create the boom or bust cycles that risk landlords losing all their equity when a hot market cools.

The Oklahoma City real estate market is bolstered over the long term by its excellent long-term demographic trends. The median age is in the mid-thirties, several years younger than the rest of the country. A quarter of the population is under age 18, and because of the strong local economy, they don’t have to move away to find work. Expect locals to stay and raise their families here, keeping the local Oklahoma City housing market stable.

The Oklahoma City real estate market is notable for how affordable real estate is. As of May 2022, the typical home value in the Oklahoma City metro area is $213,799 (Zillow). Oklahoma has the country's fourth-lowest median home values and its condos have the lowest. Despite steady price appreciation, you can buy single-family homes to rent out at a fraction of the cost of a California condo.

OKC also ranks among the top cities in a small business environment. Justbusiness.com ranked Oklahoma City as the fourth-best city to work for a small business. The business website used a combination of factors including establishment rate, growth rate, employees, average payroll, and housing costs in the equation. Oklahoma City’s 61.96 index score only trailed first-place New Orleans (74.20), Cleveland (67.27), and Buffalo, N.Y. (63.37).

According to the “Doing Business North America Report” released by the ASU Center for the Study of Economic Liberty, OKC is the easiest place in North America to do business. The report looked at a variety of business factors with OKC scoring high in employing workers, low taxes, and ease of registering property.

Housing Stock Growth Is Slow

Oklahoma City is issuing building permits for single-family housing slowly. The new multi-family housing stock is slow to nonexistent. The Core to Shore redevelopment of downtown Oklahoma City will bring new commercial buildings to accompany the new convention center. However, this urban redevelopment plan does not include condo towers and apartment buildings that would lower the demand for rental units in the surrounding area.

Homebuilders started more houses in the first half of this year than last, despite the coronavirus pandemic and accompanying business shutdowns. With a shortage of housing inventory, mostly at entry-level price ranges, and persistent, historically low mortgage interest rates, builders roared into 2020 with 491 starts in January — an increase of 63.1% over January 2019 — then a 28.5% year-over-year increase in February.

The 2,674 homes permitted through June was an increase of 6.5% compared with the first six months of 2019, according to Norman-based Dharma Inc.'s Builder Report, which tracks home construction in Oklahoma City, unincorporated Oklahoma County, Bethany, Blanchard, Choctaw, Edmond, Midwest City, Moore, Mustang, Newcastle, Noble, Norman, Shawnee and Yukon.

Good Rental Market

Oklahoma City is notable for the relatively large number of colleges and universities in the area. There are five public universities in Oklahoma City and its suburbs. There are fifteen more private universities in and around the city. If you want to invest in the Oklahoma City housing market while catering to students, this diversity is a plus because the value of the housing isn’t tied to the rise and fall of one particular university.

According to Census.gov, the median gross rent between 2012 and 2016 in Oklahoma City was around $800. According to RENTCafe, 38% of the households in Oklahoma City, OK are renter-occupied while 61% are owner-occupied. Before the pandemic, average rent prices were growing at 2% annually.

As of July 02, 2022, the average rent for a 1-bedroom apartment in Oklahoma City, OK is currently $874. This is a 13% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Oklahoma City increased by 29% to $1,125. The average rent for a 1-bedroom apartment increased by 2% to $874, and the average rent for a 2-bedroom apartment decreased by -2% to $999.

• Two-bedroom apartment rents average $999 (a 10% increase from last year).
• Three-bedroom apartment rents average $1,470 (a 14% increase from last year).
• Four-bedroom apartment rents average $1,783 (a 12% increase from last year).

However, the rental rate depends on where you live and how large the place is. For example, a one-bedroom apartment downtown costs around $1,720 a month to rent whereas you’d pay about $987 a month in Harvest Hills. Many residents would pay this amount or a little more to rent a single-family home, while the mortgage and property taxes on the property would let the landlord clear several hundred dollars a month.

Overall Market Stability

We touched on the topic of not wanting to end up buying at the peak of a housing bubble before the collapse. For those who want to know if their investment will retain its value, you’ll appreciate knowing that Oklahoma City is one of the least volatile housing markets in the country. The FHFA home price index only showed year-over-year declines in four quarters between 2011 and 2016.

While these years aren’t the worst for real estate (see the 2007-2008 housing collapse), they reflect a large part of the recession where housing fluctuated wildly before beginning to recover. As of 2022 Q1, Oklahoma City metro ranks #38 in the FHFA home price index. House prices rose 18.7% over the past year and 3.6% over the last quarter. The cumulative change since 2007 has been 81.4%.

It Is Better Than Tulsa in General

We think the Oklahoma City real estate market is a better choice for real estate investors than neighboring Tulsa for several reasons. Tulsa keeps showing up in lists for first-time home buyers because it is more affordable than Oklahoma City. That means some fewer potential renters would pay well to rent a good single-family home or apartment.

Tulsa has twice the population density. That makes single-family homes for rent more expensive and harder to find for potential landlords. The smaller average household size in Tulsa reduces the share of the population that wants to rent a larger residence, as well. Oklahoma City has a slightly lower cost of living than Tulsa, as well, attracting more residents from out of state and improving profit margins for property owners.

It Is Landlord Friendly

Oklahoma in general is landlord-friendly. In general, you don’t need a rental license to be a landlord in the state. There is no payment grace period law. Interest isn’t owed on security deposits. Rental agreements longer than 12 months must be written; any agreement shorter than 12 months is valid whether oral or written. Landlords can evict a tenant in Oklahoma City for failure to pay rent, criminal activity, and material breaches of the lease. If the landlord wants to evict them for a breach of lease, a ten-day written notice is required in which the tenant has to solve the issue.

If they don’t, they can be given 15 days to leave. If a landlord wants to evict a tenant for nonpayment of rent, he or she must first give the tenant a 5-day written notice for payment of rent. If the tenant does not pay rent within 5 days, the landlord may proceed with the eviction of the tenant. The only exception is a criminal activity that poses a health or safety threat to tenants and those around them – you can evict someone immediately for that. This includes illegal drug activity in a unit. Eviction can proceed five days after failing to pay the rent.

Conclusion

The Oklahoma City real estate market is an ultra-stable market with slow but steady increases in property valuations. There are pockets where you could tap into a large pool of renters such as around one of the many universities, though other neighborhoods are dominated by families that want more space but cannot afford to buy a home.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Oklahoma City.

Consult with one of the investment counselors who can help build you a custom portfolio of Oklahoma City turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Oklahoma City.

Not just limited to Oklahoma but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Oklahoma City turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. 

References

Market Data, Reports & Forecasts
https://okcmar.org/
https://okcmar.org/mls-dept-info/mls-statistics/
https://www.zillow.com/oklahoma-city-ok/home-values/
https://www.littlebighomes.com/real-estate-oklahoma-city.html
https://www.redfin.com/city/14237/OK/Oklahoma-City/housing-market
https://www.realtor.com/realestateandhomes-search/oklahoma-city_OK/overview
https://www.neighborhoodscout.com/ok/oklahoma-city/real-estate#description
https://okcfox.com/news/local/oklahoma-forward-riding-the-housing-market-roller-coaster-during-the-pandemic

Rental Trends
https://www.rentcafe.com/average-rent-market-trends/us/ok/oklahoma-city/
https://www.rentjungle.com/average-rent-in-oklahoma-city-rent-trends/

Low volatility
https://smartasset.com/mortgage/best-cities-first-time-homebuyers-2017
https://www.bestplaces.net/compare-cities/tulsa_ok/oklahoma_city_ok/people

Cost of living, including rents
https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+States&city1=Tulsa%2C+OK&country2=United+States&city2=Oklahoma+City%2C+OK

Landlord friendly
https://www.avail.co/education/laws/oklahoma-landlord-tenant-law

Core to Shore downtown redevelopment
https://newsok.com/article/5571657/major-players-in-oklahoma-citys-downtown-development-to-speak-dec.-4

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