OKC rental rates recede
By: Brian Brus//The Journal Record//March 2, 2018
Traffic passes by Metropolitan apartment complex at 800 N. Oklahoma Ave. in Oklahoma City. (Photo by Brent Fuchs)
OKLAHOMA CITY – Apartment rent has declined more than 2 percent in Oklahoma City over the last 12 months while rents across the rest of the country, including Tulsa, have grown by a similar amount, according to industry data.
The Apartment List market-tracking company found that Oklahoma City’s median two-bedroom rent of $800 per month and Tulsa’s monthly cost of $820 was well below the national average of $1,160. The data was not adjusted for cost-of-living market differences between regions.
Oklahoma City’s year-over-year growth rate had been positive since at least 2015, Apartment List data shows, reaching a peak of 1.7 percent in mid-2016 before the rate started contracting. By comparison, Tulsa’s apartment rental price growth peaked in mid-2015 at 3.4 percent, declined through the middle of 2017 and then started growing again.
Apartment List researcher Sydney Bennet said some of the decline is likely attributable to the oil and gas industry. Employees who lost jobs might have left the area, shifting the supply-and-demand equation for housing near where they were working.
Cathy O’Connor, president of the Alliance for Economic Development of Oklahoma City, shared some of Bennet’s perspective regarding the oil and gas industry.
“Some of it’s the downturn in the industry,” O’Connor said. “With the combined impact of downturns in oil and gas and a lot of new apartments coming online, that’s probably what’s impacted rent.”
J. David Chapman, business professor at the University of Central Oklahoma, said he’s concerned about another factor in play: overall low income levels in the market.
Oklahoma City metro renters are getting a bargain at 99 cents per square foot of living space, he said, compared with $1.53 in Dallas. New York City residents pay 44 percent of their income toward rent, compared with 20 percent in Oklahoma City.
“You’ve got people out there saying how unaffordable Oklahoma City is to live in, but at those rates? It isn’t going to get any better,” Chapman said. “Apartment owners aren’t making any money because their renters don’t have the income.”
Chapman said several C- and B-level apartments have been sold to out-of-state buyers who fix them up and expect higher rents only to be disappointed at occupancy.
Industry data also hides another phenomenon at play, he said, because some apartment owners are giving free months of rent as signing incentives. That means they can still report higher rates and hide the overall averaging effect of a small discount each month.
“It’s a perplexing problem,” he said. “The solution is more population and higher incomes.”