Oklahoma City Market - Changes Coming?

[Scott England]

Hey All

For those of you who invest in the OKC area, I wanted to reach out and get your insights.  With local multi family prices at an all time high, oil very, very low and the various national factors (inevitable rate rise, election year ahead, etc) we have been trying to keep our nose to the ground for any signs of a correction or slow down.  I'd love to hear your thoughts on this issue.

[Jack Chamberlain]

I've been trying to figure out the same thing.  Okc is tricky...even with all time highs, properties still cash flow well.  But will rents change?  Will prices "drop"?  And what is "drop"?  10%?  If that is it, I'll keep buying.  will it drop 35%?  Then I'll stop!  I'm really not sure either!

[Zach Sikes]

We're starting to see showings decrease - although it's hard to determine whether it's the cycle or season. 

[Rhett Tullis]

I am mainly speaking to the rental market here but here are my thoughts for what they are worth.

Things are slowing down (season is part of it but not all) on the rental side (have been for a few months) and prices are coming down a bit in a pretty specific price range of rental in okc.  Some areas are as strong as ever though (we have leased an average of a house every 2 days so far this year).  there are 2 main factors that I see in okc that have caused the change in those areas.

-oil/gas industry has slowed/stopped their hiring and even been laying off.  while far from the only industry in town they are a big one.  no new hires often means less tenants coming to town.

-influx of investors. there are several large (REIT) and other groups that have come into town and bought many rentals. where we had maybe 4 or 5 rentals in an area for lease certain areas have double that number.

[Travis Benham]

Newbie question:  Let's pretend we are in a down market, or soon to be down.  What should rental buyers do?  Look for homes closer to the city?  Or further out?

[Stephen Richerson]

Okc has been hot for a while.  Any downturn is a seasonal thing.  The energy issue will have a significant impact on economic growth but at the same time that will bring opportunity for good deals.  Oil and gas folks who get laid off or their oil field service industry goes bankrupt end up short selling, or get foreclosed on.  There are always investing opportunities no matter what is going on locally. 

Oklahoma is close enough to the open Mexican border so there will be a constant population growth for immigrating families.  Investing in anything south of I-40 is cheap and you can get a large family to rent it out. Most immigrating families have multiple income earners so a lot of time they are very reliable for rent and are great for an eventual lease option. 

Yukon and Piedmont are still growing and have good enough schools for rentals markets.  I have never considered MWC or Del City except for new homes around Tinker AF base.  Military folks are always in and out of town, have stable income, and more disciplined than most. 

Can't go wrong with rentals in Norman because of OU and Edmond will always be in high demand. 

However, take a look at mid town and uptown.  The schools are rough BUT many young professionals, are enjoying the culture that has been booming.  From 16th to Paseo drive, 23rd street etc, between Broadway Ave and all the way to May Ave. That are might have another 10 years of rehabilitation development.  

Still my favorites are the Village, older Deer Creek neighborhoods, and anything close to the Kilpatrick turnpike.  Over the next ten years, that entire highway will be developed all the way to Yukon.  

Stick to basics, find good deals in good school districts. 

[Deborah Burian]

Hey @Rhett Tullis, can you give some additional input on the REIT activity you are seeing?

[Rhett Tullis]

i have seen a couple come to town.  they bought around 300 to 400 houses a piece.  they seemed to focus on the surrounding areas of okc metro.  after close they would put the house up for rent approx 200 more than it was renting for before.  I have seen their vacancies tend to be a bit longer than others.  it also seems they have oversaturated a few areas (in my opinion) and when you add that with the low oil prices it can cause issues and also cause rental rates to drop a bit overall.  again this is all my opinion and observation.  I am sure there are some that would disagree.