Oklahoma Real Estate Market Trends & Analysis


The Oklahoma real estate market has demonstrated an increased propensity towards buyer stability over 2020. Whereas many markets across the country have seen exponential increases in home values price buyers out of the market, real estate in Oklahoma remains both relatively attractive and affordable. Due largely, in part, do a diversified industry, Oklahoma hasn’t experienced the same extremes as the majority of the United States.

Local affordability turned into a catalyst once the Coronavirus arrived, however. While activity slowed when COVID-19 was declared a pandemic, the stagnation didn't last long. In a few short months, pent-up demand, attractive borrowing costs, and rapid appreciation all contributed to a very active housing market. In the last year, in fact, homes in Oklahoma appreciated at a faster rate than their average national counterparts. As a result, local investing remains alive and well.

Long-term exit strategies appear to have gained the edge over the ever-popular rehab strategy. If for nothing else, today's most prominent indicators suggest the Oklahoma real estate investing community will have better luck building out their rental portfolios for the foreseeable future. That's not to say rehabbing isn't still a lucrative career path, but rather that landlords look as if they are currently exercising a position of power in Oklahoma.

The Top Oklahoma Real Estate Markets


While the best real estate market in Oklahoma is up for debate, here’s a list of the cities investors may want to pay special considerations to:

Oklahoma Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Title Companies, Lenders, Real Estate Agents, Attorneys
Conveyance: Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method: Judicial
Process Period: 4 - 7 months
Notice of Sale: Sheriff
Redemption Period: Until Confirmation

Taxes

Income Tax: 0.50% - 5.00%
Corporate Tax: 6%
Sales Tax: 4.50%
Estate Tax: No
Inheritance Tax: No
Median Property Tax: 0.74%
Property Taxes by County: http://www.tax-rates.org/oklahoma/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,498.00
Transfer Fee: Deed 0.15%; Mortgage 0.02% - 0.1%
Origination Fee: $1,908.00

Oklahoma Housing Market Overview

  • Median Home Value: $139,614
  • 1-Year Appreciation Rate: +6.2%
  • Median Home Value (1-Year Forecast): +7.0%
  • Median Rent Price: $1,050
  • Price-To-Rent Ratio: 11.08
  • Unemployment Rate: 5.3% (latest estimate by the Bureau Of Labor Statistics)
  • Population: 3,943,079 (latest estimate by the U.S. Census Bureau)
  • Median Household Income: $49,767 (latest estimate by the U.S. Census Bureau)
  • Percentage Of Vacant Homes: 13.53%
  • Foreclosure Rate: 1 in every 9,411 (1.0%)

Oklahoma Median Home Prices


The median home value in Oklahoma is $139,614, which serves as a testament to the strength of the state’s housing sector. If for nothing else, real estate in Oklahoma has come a very long way in a relatively short period of time. Nearly a decade ago, in fact, Oklahoma home prices bottomed out in the first quarter of 2012. At the time (July 2011), Oklahoma's median home value was around $104,000, which marked one of the state’s lowest points of the recession. By the first quarter of 2012, however, real estate in Oklahoma had kicked off what would amount to at least eight consecutive years of appreciation.

Thanks, in large part, to a strengthening economy, improving optimism, and a distinct lack of available inventory, home prices in Oklahoma were able to gain ground. In as little as a few years, nearly all of the equity that had been lost as a result of The Great Recession was returned, and then some. For eight consecutive years, however, prices appreciated at a historical rate, to the tune of 34.2%.

To put things into perspective, the median home value in the United States was around $160,000 when the recession was at its lowest point (February 2012). Since then, the median home value in the United States has appreciated more than 50.0% to get to where it is today.

To be clear, real estate in Oklahoma has trailed many of its national counterparts over the last ten years. However, the last year has seen a changing of the guard. Over the last 12 months, the median home value in the United States increased by 5.8%, whereas the median home value in Oklahoma increased by 6.2%. The difference may be attributed to local affordability, as more people flocked from expensive cities following years of appreciation. Many of the people who left primary cities moved to call Oklahoma home, which most likely drove up the competition, and inevitably home values. Ironically, it seems to have been the state's affordability which has driven up prices in recent history.

Moving forward, the Oklahoma real estate market will most likely keep pace with national appreciation rates, with many experts calling for both markets to increase somewhere in the neighborhood of 7.0% over the next 12 months. The similar trajectory is most likely the result of the pandemic. Prices should increase because of the indicators left behind in the wake of COVID-19. Borrowing costs are historically low, inventory levels are nonexistent, prices are rising, and pent-up demand is widespread. These factors have catalyzed buyers, and the resulting competition will drive prices up moving forward.

Oklahoma Foreclosure Trends & Statistics


Nearly one in every 9,411 homes in the Oklahoma real estate market are in some stage of distress: pre-foreclosure, auction, and bank-owned. At that rate, Oklahoma's foreclosure rate is about 1.0%. Year-over-year, foreclosures are down, as equity has increased dramatically alongside home values. In particular, pre-foreclosures have experienced the largest year-over-year decline, dropping 86.6% from the previous year. The significant decline in pre-foreclosures is most likely the result of a stronger economy. Today, pre-foreclosures make up 24.2% of the state's distressed inventory.

Auction properties, on the other hand, declined the least year-over-year, and now make up the state's largest proportion of distressed homes. In all, 45.1% of Oklahoma's foreclosures are to be placed up for auction, which means investors may not want to ignore local auctions. Attending auctions will reward local investors with access to the state's largest inventory of distressed homes, and increase their chances of landing a deal.

For a better idea of where to look for auctions or distressed inventory, here's a list of the neighborhoods in Oklahoma with the largest distributions of foreclosures:

  • Harmon: 1 in every 1,532 homes is distressed

  • Logan: 1 in every 3,492 homes is distressed

  • Le Flore: 1 in every 4,381 homes is distressed

  • Grady: 1 in every 4,540 homes is distressed

  • Love: 1 in every 4,566 homes is distressed


It should be noted, however, that while foreclosure filings have dropped year-over-year, the Oklahoma real estate market will most likely see an increase sooner rather than later. Foreclosure filings across the country have already started increasing in the wake of the pandemic, and it's only a matter of time until Oklahoma follows.

“While foreclosure activity remains over 80% below 2019 totals, there was a significant increase in foreclosure starts in August compared to July,” said Rick Sharga, Executive Vice President at RealtyTrac. “Several states – including Florida and New York – that have had foreclosure moratoria in place have recently loosened some of their restrictions, which may explain the unexpected bump in the monthly numbers.”

Tax Lien Investing

  • Tax Lien or Deed: Tax Lien and Tax Deed state
  • Interest Rate: 8% on TLCs
  • Redemption Period: 2 years for TLCs

Oklahoma Real Estate Investing


Real estate investors and homeowners across the country have enjoyed several years of seller gains and attractive ROI (return on investment). According to Attom Data Solutions’ most recent Home Sales Report, in fact, the average home seller in 2019 “realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago.” Profits were calculated using the median purchase and resale prices and currently represent a 13-year high.

The report went on to say that profits “represented a 34 percent return on investment compared to the original purchase price, up from 31.4 percent last year and up from 27.4 percent in 2017, to the highest average home seller ROI since 2006.” Simply put, average U.S. home seller profits are higher than they have been in a really long time, and Oklahoma is no exception. Following years of historic appreciation, homes are selling for more in Oklahoma than they have in years past, which bodes well for local investors.

While appreciation has served the local housing market well, it has certainly made it harder for the Oklahoma real estate investing community to find attractive profit margins. Sure, rising foreclosure rates should enable investors to secure deals below market value, but the truth remains: Real estate in Oklahoma is less conducive to rehabs than in years past. That's not to say Oklahoma real estate investors can't continue to renovate deals (the absolutely can), but rather that the new housing market created by the pandemic is more suited for long-term investors. In particular, today's most prominent indicators appear to lean heavily in favor of rental property owners.

In addition to historic appreciation rates making attractive profit margins harder to come by, investors may want to consider building a rental property portfolio because of today's interest rates. You see, the Fed announced it would keep interest rates low to provide a spark for the housing market, and it worked. As recently as October, the monthly average commitment rate on a 30-year fixed-rate mortgage was 2.83%, according to Freddie Mac. To this day, it has never been cheaper to borrow institutional money. In fact, rates are so low, they may simultaneously help justify high acquisition costs and increase monthly rental property cash flow.

If that wasn't enough, landlords will find plenty of demand for their properties. With a state-wide price-to-rent ratio of 11.08, it's more affordable to buy a home in Oklahoma than to rent one, but inventory levels remain insufficient. While more people do want to buy, a lack of available housing is relegating a lot of people to the renter pool. Even those who want to buy are forced to rent. As a result, landlords will find their assets receiving plenty of attention, and perhaps even demanding a premium rental rate.

Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

Oklahoma Housing Market Predictions


The Oklahoma housing market has had a great run, much like the rest of the country. For the better part of a decade, in fact, real estate in Oklahoma has exhibited many of the same characteristics as its national counterparts. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can the Oklahoma real estate investing community expect moving forward?

  • Tulsa will grow in popularity: Tulsa may be in line for some added attention from prospective homebuyers. In particular, more people may migrate to Tulsa in an attempt to seek city living with relatively affordable prices. At $136,967, the median home value in Tulsa is below the state average, which bodes well for first-time buyers. At a time when prices have appreciated for nearly a decade, Tulsa's value proposition may be too good to ignore.

  • Historic appreciation will continue: Despite the pandemic, real estate in Oklahoma remains red hot. As it turns out, pent-up demand was enough to maintain an active housing sector. However, there simply aren't enough listing to keep up with demand. As a result, sellers will increase asking prices to line up with the competition. Home values may increase by as much as 7.0% over the next 12 months.

  • People will leave big cities: Metropolitan areas have become dangerous because of the pandemic. As a result, more people have been allowed to work from home, essentially freeing them from having to live within proximity to work. That said, it only makes sense that people will want to escape more expensive cities and trade their tired confines for more spacious suburban homes.

Summary


The Oklahoma real estate market has trailed the national housing sector for quite some time. Since the end of The Great Recession, in fact, local home values simply didn't keep pace with nationwide trends. That said, a shortcoming in the last eight years may have worked to the state's advantage. Today, real estate in Oklahoma is extremely affordable. At a time when prices have been increasing at a historical pace, the Oklahoma real estate market may gain a lot of attention from first-time buyers. The added attention will eventually translate into activity, which bodes incredibly well for the entire real estate investing community.

Sources:



https://www.zillow.com/ok/home-values/
https://www.zillow.com/tulsa-ok/home-values/
https://www.zillow.com/home-values/
https://www.bls.gov/eag/eag.ok.htm
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ok/
https://www.realtytrac.com/statsandtrends/ok/
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-year-end-2019-u-s-home-sales-report/
https://www.attomdata.com/news/market-trends/foreclosures/attom-data-solutions-august-2020-u-s-foreclosure-market-report/#:~:text=%E2%80%93%20September%2010%2C%202020%20%E2%80%94ATTOM,of%209%2C889%20U.S.%20properties%20with
http://www.freddiemac.com/pmms/pmms30.html
https://www.mashvisor.com/blog/2019-price-to-rent-ratio-by-city/

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