Far cheaper to buy than rent in Oklahoma City, but some are stuck
Filed by Ben Allen in Feature.
December 10, 2012
Going from renter to home buyer can be a big step, both financially and emotionally. But in Oklahoma City, it’s makes more sense than just about anywhere else. A survey earlier this year found in all of the Top 100 metros in the US, the finances at least even out. But the numbers split in the metro, in a big way…it’s up to 63% cheaper to buy than rent…
I wanted to know exactly who the author behind the study was: “So are you a renter or buyer?”
And got this: “It’s funny that no one’s asked me this in an interview…I’m an owner, I have rented.”
This is Jed Kolko, he’s the guy who put together the study for the online real estate firm Trulia. He’s going to be back to break this all down. But enough with numbers.
A tour with 31 year old Ann White: “Well this is my living room, my apartment’s a total of about a little over a thousand square feet…”
And 23 year old Meredith Thomas: “Well welcome to our home, we live at Level apartments and as we walk through, you walk in and you see our kitchen area…”
Ann White lives in a spread out apartment complex in Norman, with close to 30 buildings filling a simple plot of grass. And Meredith lives with her husband Clark in the new Level apartments in downtown Oklahoma City. Here’s Clark:
“We’re still able to save a good amount. And eventually we will buy something and hopefully it’s downtown. It’s just our priorities are a little bit different and so it’s a greater investment and it’ll take a little bit more time than if we just moved a little bit outside of downtown and bought a house.”
Clark and Meredith were actually within 24 hours of going under contract for a house in Oklahoma City, before issues came up. Meredith lays out the situation:
“If we could own downtown, if that was a reasonable option for us right now, we would to being downtown. There’s a quality of life matter, we can both walk or ride our bikes to work.”
“If they’re wanting to look into a specific area, let’s say the Paseo area downtown, you’re kind of at a tight inventory there,” says Lorna Koeninger, President of the Oklahoma City Metro Association of Realtors.
She says Oklahoma City’s got about enough houses on the market to last a little more than 5 months, but that’s not very long. Many neighborhoods don’t have many options. And so more people, who want to buy, and who can financially afford to buy, try, try, try not to think about the what if, just ask Clark:
“All the time. Yeah. It’s not cheap to live where we are, and so every day when I look at our budget, I’d love to have a few hundred dollars back a month.”
After all, the average monthly cost in the Oklahoma City metro is about $600 dollars, for renting, add almost a thousand dollars a month to that.
But some are actually eager to rent. Remember Ann? She says renting is ideal, even when factoring in finances.
“I like the freedom and flexibility of renting…recouping costs in a house, I don’t have to worry at the end of the day if my sinks backed up.”
“I like not worrying. Every year I have friends who own homes who have an air conditioning go out or have plumbing collapse, or one thing or another.”
As a single woman living by herself, she doesn’t want to have to get concerned with anything. She doesn’t have to learn the intricacies of a drainage system, or pay someone to figure it out for her. And Ann tries to block out those pesky numbers.
“I actually looked up on the tax records what my landlord paid for my last house, and I think I paid that in rent over those years. Now granted, he had to put a lot of money into flip it.”
So, Jed, why is this even the case in Oklahoma City? Why is it that monthly costs of buying a house can come out to half, and then some, of renting?
“In big coastal cities, where it’s hard to build new housing, that’s where people expect to see the biggest price increases in the future. Though in other parts of the country, where there’s a lot of available land and room to build in all directions, prices aren’t likely to rise, because you can build more housing.”
Wait, but is it as simple as supply and demand?
“Oklahoma City’s very different from some of the other places where it’s cheaper to buy because there’s been much stronger job growth largely because of energy.”
“If someone moves to a new city for a new job, they’re more likely to rent than buy initially, just to get to know a city, a neighborhood, and see how long they’re going to be there.”
The study assumes you’ll stay in the house for 7 years, and get a 3.5% interest rate. As you start to change either of those, the gap narrows. And it compared all properties on both the rental and buying market – there may be more nice houses and apartments up for rent, boosting the price a bit.
To finish this off is Dustin Akers, friend of Meredith and Clark Thomas, and someone in a similar situation.
“Yeah it really doesn’t make sense. I mean, technically you’re really just throwing your money away every month and just providing profit for someone else’s investment.”
So while some see renting as their best option, others feel stuck. With the numbers in their favor, they want to lay down stakes, but they can’t find a house they want to hold onto.