Is it a good time to buy?

[Mike Miser]

I am new to RE. So new that I've never invested. Anyway, through my studies it seems that we are at the top of the market now. Is it a good time to invest right now?

[Nate Garrett]

Hi @Mike Miser. Although acquisition prices have increased significantly since the lows of 2012-2013, rents have also increased and low interest rates provide attractive financing options for single family rentals. 

See the graph below. The blue line is the national home price index and the red line is the rental index. The idea being that the best times to buy are when the blue line is significantly below the red line. Of course this is national data, and all real estate markets are local. So you must ask yourself if it's a good time to buy in your area. 

Oklahoma City and Tulsa are certainly exposed to the turmoil in the oil and gas industry, but the effect that low oil prices will have on rental rates and acquisition prices remains to be seen. We are not nearly as exposed as we were in the 80's, but we're still very much an energy state. If oil prices remain low, job losses will continue and I would expect to see another round of foreclosure inventory in our local markets. Rents will also likely be negatively affected, but to what degree is debatable. On the other hand, the extremely low interest rates on 30 year mortgages can't last forever and still provide a compelling reason to purchase rental properties in my mind.