Oklahoma City market and oil prices

5 Replies

Hi everyone,

The oil and gas industry is a huge driver of our state economy and with $50/barrel, oil companies around here are making cuts and laying people off. This will be my first rehab and I already have all my financing in order but just wanted to see what you all thought about the current market situation?

Do you think 2015 will be a good time to start rehabbing and flipping houses in the OKC market?

@Ryan Ogden  

It always goes back to the fundamentals.  Make sure you buy in an area where there is demand.  In many parts of town we are extremely low on inventory in the sub $250k range, so even if lay offs happen it will take some time for the market to even up.

*Disclaimer - this is my opinion, I'm not an economist. 

I echo what @Zach Sikes  said. Just make sure you have plenty of room in the deals you do and get your After Repair Value down solid. Make sure you have a backup price or even multiple ones. What if for some unforeseen, oil-related reason real estate prices dropped 10%? Would you break even? Lose money? Not saying this can or will happen, just using it as a hypothetical. The point is, think through the best, good, bad, and worst scenarios and see where you would end up. If you don't like the risk, then maybe it isn't worth it. I'd say it probably is though (my opinion). 

Also, you can't stress location enough as was stated. It's a good way to hedge against a falling market at least on some level. 

Lastly, 2015 should still be a good time to rehab properties. If the people panic because of oil prices and cry "SELL SELL SELL", then home prices drop as the market floods. While you may not make the most out of current rehabs with declining prices, the market would be headed straight towards where you want it - a time when others are running away and prices are low being primed for a rebound. Make sure to stay on top of the market by asking on here or talking with a Realtor (or two) every now and then. Zach is pretty on top of things as you can see. I have my license and can help answer some questions as well. 

Disclaimer - All opinions of course. Also want to say I'm not as experienced as Zach or some of the others on here. 

Couldn't agree more with both @Zach Sikes  and @Tyler Weinrich  . I've asked this question to myself a few times and so I started doing some research a couple of weeks ago. Although oil companies are still obviously a huge player in Oklahoma, it doesn't seem like the economy relies on them as heavily as they did in the 1980's...which is why the Oklahoma economy was devastated when the price of oil went below $10/gallon. ($22 in today's money).

Since then, the state has done a great job of attracting different business segments and industries in order to avoid repeating history. I'm not too worried now that Oklahoma has aviation, health care, entertainment, tech startups, and Kevin Durant.

@ Zach Sikes,  thanks for the reply.

When you say that we are low on inventory in most parts of town, are you referring to inventory for investors to flip or rent out? 

@ Tyler Weinrich,  thanks for the advice.  I agree with your statement about home prices dropping as the market floods.  I would would think moving forward that investors would have more negotiating powers with banks or sellers as prices continue to drop and get a cheaper price then say 8 - 12 months ago...

Thank you both for your replies and opinions.  I really appreciate it.

@Ryan Ogden  

When I say low on inventory, I mean low on all sales.  Here's a link to a chart of inventory levels in Edmond I did about a month ago.  Generally speaking, a balanced market is considered to have about 6 months worth of inventory.  As you can see, we are pretty darn low under $250k and especially under $200k and $150k.  

@Tyler Flagg  is correct.  We have a much more diversified economy than we did in the 80's - although I'm almost ready for a little pull back so I can find some deals a little easier!

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