OKC, A poor city with big upside
Year after year the stability of the Oklahoma City housing market keeps performing, A city on the rise even in the face of national headwinds the city, and those around it, keep proving that Central Oklahoma is a solid investment. State and federal government take the prize for the largest employers in Central Oklahoma followed by the medical industry and education. All three of these sectors performing well historically, under any market conditions.
Episode 114 of the Oklahoma Real Estate Show I talked with my special guest Richard Mize from The Oklahman, the largest newspaper in the state of Oklahoma. We talked about how the Oil bust of 1987 in Oklahoma devastated the market (-17% Housing price index) and taught local leaders valuable lessons. Mize says he remembers seeing 1986 model cars driving around everywhere for years after as that was the last year of the oil boom. A symbol of time standing still after the oil bust devastated the majority of the population.
Many of the neighborhoods today show the scars from people abandoning their homes to seek employment elsewhere in the decade to follow.
Through the 1990’s the homes people abandoned during the oil crash of 1987 in Oklahoma City, were being bought for pennies on the dollar by people who never had the budget to maintain the homes. Thirty years later, the kids of these homeowners became the owners and who learned by watching their parents that living in homes falling apart was just part of life continuing the insanity. It’s all they knew.
Now, investors are leveraging technology to market and acquire these properties from a generation of neglect and turn entire neighborhoods around doubling squarefoot prices year after year. It’s a process for sure but the facts are simple, Oklahoma City and the surrounding cities have thousands upon thousands of properties with homeowners unwilling to take care of their homes.
Code enforcement violations alone could send 30,000+ people hiking if the city decided to take action. These are people that are demonstrating to the public, through lack of the most basic of basic home maintenance, that they can't or won't comply with basic housing laws. I don't know what the long term solution is, but what I do know is these homes are being destroyed and the law is being broken in the process. The owners, without saying it, are crying out for someone to take control. Relieve them from the burden of taking care of a home. Through their actions they are telling the world I NEED A LANDLORD.
As we entered 1995 with the relatively new internet now available to the masses, online businesses exploded onto the scene in a wave called the “Dot Com” Era. A promise and a hope that fortunes could be made now investing in the newly emerging internet business industry. But in late 2000’s consumer confidence dropped when numerous technology companies that had raised money and gone public faile to turn a profit. This triggered massive sell offs in the stock market. The Nasdaq, which rose five-fold between 1995 and 2000, saw an almost 77% drop, resulting in a loss of billions of dollars. Mize says that Oklahoma City experienced this as well with most notably the halt of a 400 million dollar fiber optic plant by Corning Inc already under construction in 2001. Sixteen years later a developer named Richard Tanenbaum bought the 40 million dollar shell for 3 million in 2016 turning it into a large class A office building according to an article written by mize in 2016.
After the DOT Com crash came the frenzy of the pre housing recession, where loans were handed out like candy and the market in the nation exploded with buyers purchasing homes across America using subprime loans which required little or no documentation. By 2008, 1.2 million foreclosures were started in the first half of 2008 alone, Eventually over 3 million people lost their homes and 9 million jobs were lost during 2008 and 2009, roughly 6% of the workforce. While many parts of the nation saw 20 percent or more drops in home values, here in central Oklahoma numbers were much easier to swallow at just 7%.
Mize told me on episode 114 of the Oklahoma Real Estate Show that builders were still building, they were acknowledging that its tough out there but Oklahoma, Edmond, Yukon And Moore are nowhere near other places. In other words the builders came together to encourage and build hope in Oklahoma and it worked. Oklahoma made Forbes list of recession proof cities securing spot #1 in the nation. “Did someone say something about a recession? With falling unemployment, one of the strongest housing markets in the country, and strong growth in agriculture, energy and manufacturing, Oklahoma City might not have received the recession memo, and it looks best positioned of the nation's metropolitan areas to ride out the current crisis. Booming valuations of Oklahoma City's largest companies, like Devon Energy and Chesapeake Energy, suggest the energy sector is the right place to be.” Forbes Magazine writes in there article titled In Depth: America's Recession-Proof Cities released in April of 2008.
Oklahoma City has had its fair share of lessons, this has resulted in a city and state with a purposefully diverse investment strategy, specifically to avoid ever repeating the horrors of the late 1980’s and the fall out that took decades to fully recover from. The ground is good here and it’s time for you, the law-abiding homeowner, to take control.
Flip the house or Buy and rent, there are thousands of homes waiting for you and a solid state government stimulating the service sector to keep paychecks rolling in no matter what the national economy is doing.
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