Tulsa Rental Market Update - Fall 2016

Tulsa rental market continues to significantly outpace inflation

As 2016 comes to a close, let's take a look at the performance of the Tulsa rental market (and suburbs) over the last few years and discuss some factors influencing the market moving forward. Using raw data provided by Zillow.com, we created a series of charts to assist Tulsa-area single family property owners in understanding current rental trends in the  metro area.

Impact of the 2007 housing crisis on the Tulsa rental market

The Tulsa rental market was not as severely affected by the 2007-2008 housing crisis as other markets, but after the crisis, rents were somewhat stagnant until 2012, when a period of strong rent appreciation began. Since then, rents have continued to grow strongly year over year in the Tulsa metro.

Strong rental growth in the suburbs

The above chart shows a strong overall upward trend in rents beginning in 2012 and continuing until the present. But it is clear that some of the suburbs have fared better than others over the last 4 years:

This data meshes nicely with our observations of rental growth and leasing activity in the Tulsa metro. Jenks and Bixby both offer excellent school districts and properties in these two suburbs have had great rental price appreciation and tend to lease very quickly.

Tulsa and Owasso have also had excellent rent appreciation over the last 4 years. The Broken Arrow rental market has underperformed a bit, but has still managed to outpace inflation.

Tulsa Rental Market Outpaces Inflation

The good news for real estate investors in the Tulsa area is that rental growth has continued to grow faster than inflation for the last 4 years. The average annual inflation for the last 4 years has been very low:

2012 - 2.1%

2013 - 1.5%

2014 - 1.6%

2015 - 0.1%

2016 - 1.0% (Jan-Aug)

Source: US Inflation Calculator

This is excellent news for Tulsa real estate investors, especially those that have their properties financed with long-term, fixed interest rates. In this case, the monthly principal and interest payment has remained the same, while rents have been steadily increasing.

Looking forward

Local economic conditions play a critical role in the Tulsa rental market. Low oil prices remain a threat to employment levels, which could negatively impact the rental market.

However, as has been noted by several major studies, the housing crisis and other demographic trends have fundamentally altered the housing market nationwide. Homeownership levels are down significantly and forecasts point to increased numbers of renter households for the foreseeable future. As a result, we believe it is likely that there will continue be strong demand for single family rental homes in the Tulsa metro area in the near to mid-term.