Newspaper article THE JOURNAL RECORD

Interest Rates Affecting Apartment Dwellers in OKC and Tulsa

Newspaper article THE JOURNAL RECORD

Interest Rates Affecting Apartment Dwellers in OKC and Tulsa

Article excerpt

A softening of the single-family homes market and rising interest rates are affecting Oklahoma City and Tulsa's apartment vacancies and are causing some Class C apartment dwellers to reverse the trend of buying new homes, experts said Tuesday.

High interest rates will definitely discourage some renters from buying, said Darren Currin, vice president and research director for OKC Property Research LLC, an independent research and consulting firm specializing in Oklahoma City commercial real estate. It is a trend we're going to see continue. It is all based on what interest rates do, and so far it doesn't appear that the federal government seems willing to lower them yet.

He said with current mortgage rates being offered at 7 percent or more, first-time buyers tend to stay with renting, while Class A and B apartment renters took advantage in recent years and bought new homes while interest rates were low. Class C apartment community owners are also reacting to the influx of California-based investors who are buying up properties, and more than half of the apartment complexes that have sold in recent years are Class C properties that were built before the 1980s.

California-based investors got apartment owners in Oklahoma thinking of how to take advantage of a seller market, and there is more Class C properties for sale as people list their properties trying to achieve high prices, Currin said. Some are doing OK with their property and some are not. Some are being relisted on the market, some are trying to flip them, while some are trying to dump the properties while they can.

He said California-based investors are being lured to Oklahoma by the lower price-per-unit cost and the ease of purchasing property in Oklahoma.

Compared to what they pay in California price-per-unit, Oklahoma looks like a bargain, Currin said. In some cases they are able to reposition the properties, and for some the rate of return is slower. Sometimes, the intent of new owners is to raise rents to recapture their initial investment.

He said some new owners haven't always been able to achieve higher rents in the Class C market because there are so many apartment units available and so many concessions are offered. …

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