Out of all of the large American rental markets, Oklahoma City offered renters the most space for their money. According to an early 2016 Axiometrics analysis, the average renter paid $953 for an apartment with 962 square feet. This works out to about. $.99 per square foot. This made this city the only large American city with an average rent under $1.00 a square foot. In nearby Dallas, average apartment renters pay $1.53 per square foot. Compared to most other American cities, Oklahoma City offers renters a good value for their money.
Oklahoma City Residents Enjoy More Space for Their Money, but Rents are Increasing
The good news for renters is that Oklahoma City seems to be one major city that doesn’t struggle with affordable rents like many other cities do. Average renters could limit their housing budgets to about 20 percent of income. At the other extreme, average renters in New York City pay 44 percent of income for rent. Even though some real estate observers have mentioned that a slump in the oil industry may have contributed to lower rental prices in Oklahoma City, housing still appears affordable for a typical resident of Oklahoma City.
In that respect, the situations in other oil-industry cities like Houston and Dallas are very different. Property owners in those two Texas cities have concerns about overbuilding of high-end complexes, demolition of older and cheaper complexes, and lower employment numbers than expected. Perhaps because the rental market in Oklahoma City had not boomed the way the markets in these two cities did, developers were more conservative in their approach to building. For example, they may have chosen to rehabilitate older complexes instead of demolish them and rebuild.
This frugality may begin to pay dividends. At the same time that average rents remain fairly low, both rental prices and the number of rentals appear to be increasing during the first part of 2016 in Oklahoma City. Trulia reported that the average rent paid in the city increased from $900 to $1,000 since January of 2016. In January, there were only 730 new rentals in the city, and in June, there were over 1,100.
Certainly, some of this upswing since the first of the year might simply be a seasonal variation. For example, many families prefer to move during the summer when children have a break from school. It’s also interesting to note that Trulia reported a decrease in the average price per square foot for home sales. It might be true that some uncertainty about employment is causing some people to rent apartments instead of invest in their own homes. At least, in Oklahoma City, these renters appear to be able to find affordable places to live.
The Outlook for Oklahoma City Owners
The growth in both rental prices and rental rates should provide some good news for Oklahoma City landlords. Another Axiometrics report found that 49 of the 50 biggest rental markets enjoyed growth in 2015, and Oklahoma City was the only exception with a decline of .6 percent. Even though some property owners may have struggled with stagnant rental prices, it’s fair to remain optimistic that the rental market in the city will begin to get stronger.
Realtors in the city urge property investors to remain realistic about pricing by understanding the value that residents have come to expect in exchange for their rent payments. In that way, Oklahoma City might avoid the housing affordability issues that may plague landlords in other major cities. Of course, the strength of the rental market in the city may be mostly influenced by the economic situation, so it’s a good idea to keep an eye on employment predictions and other indicators.
Attention Oklahoma Property Managers: Join Us for an AppFolio Meet-up!
Join us for a fun, casual, and complimentary lunch on July 20th at Venue 104 Restaurant. We’ll cover AppFolio best practices and you’ll also have an opportunity to network with your property management peers in the Oklahoma City, OK area. Register Here.