Downtown Housing Prices

[traxx]

In the Wheeler thread, Pete made a comment about people being priced out of downtown. Instead of highjacking that thread, I thought I'd start a new thread on the subject here.

I spoke with a young lady a couple of weeks ago that just moved to OKC from the Tulsa area and she's been looking at downtown housing. All of it is priced out of her range though. She works near the downtown area and would like to live nearby but isn't able to financially. Hopefully Wheeler gets built like Humphreys says it will and it will have a mix of prices. Besides that, are there any other planned developments downtown that seek to have affordable pricing or at least a mix of pricing?

[Pete]

^

Is the young lady you mention looking to buy or rent or both?

[Rivalyn]

^

Is the young lady you mention looking to buy or rent or both?

I know someone in a similar situation that's in an either/or situation in case you can speak to either.

[Pete]

Okay, so let's start with rental units.

Looks like current rent per SF per month ranges for $1.50 to $2.10. So, for an 800 SF apartment, that's $1,200 to $1,680 per month. Pretty steep, no doubt.

Yet, apartment occupancy rates in the core are very high. Most places have waiting lists and as apartments turn over, the rents are gradually increased. Don't see this changing even when the big complexes like Steelyard, Metropolitan and LIFT all open up in about a year.


Let me run some numbers on the recent condo / townhouse sales.

[Pete]

Here are the latest sales:

3391SF $880,000 Hill $259.51
3615 $900,000 Hill $248.96
1053 $228,000 Central Ave. $216.52
1254 $425,000 Centennial $338.92
2758 $600,000 Brownstones $217.55
2723 $590,000 Brownstones $216.67
793 $180,000 Maywood $226.99

Average of $243.99 per square foot


Note the high price for the one Centennial unit, which is the only condo complex in OKC to quickly sell out.

You think that would provide major motivation for building more on the canal or anything with a view.

[Pete]

One of the big problems with both the downtown for sale and rental markets is that is all relatively new.

Sycamore Square is about the only exception on the for-sale side.

For rentals there is also Sycamore Square south and the Regency. Almost everything else represents new or recent major renovations.

[bchris02]

I think OKC is ready for its waters to be tested with some mid-rise luxury condo towers like these ones in Little Rock.



300 Third and River Market Tower were built in the late '00s right at the end of the building boom last decade. Imagine towers on that scale somewhere in east Bricktown or in Midtown. Something like that would also be great on the site where Bricktown Mini-Golf is going.

What do you think is holding back developers from building that kind of development in OKC? With low unemployment, brisk growth, and high value per square foot you would think developers would be lining up to build such developments. Instead you have ClayCo demanding a very hefty TIF just to build rental units because they don't think the market can support it. Cities all across the country with far less going for them (like Little Rock) have had no problem getting them.

[Pete]

Almost all the development in OKC to date has been done by locals and none of them have any experience with mid- or high-rise.

Milhaus (LIFT) and Bomasada (Metropolitan) are exceptions and maybe after their current projects they'll consider it.

I'd like to see Milhaus take their proposal for the south of Stage Center lot to 4th & EKG or the REHCO property south of the Myriad Gardens.

[bchris02]

I agree. That would be amazing at 4th and EKG. Hopefully something like that comes to fruition.

[gopokes88]

At the end of the day supply and demand kicks in. There is tremendous demand and tight supply no matter what we do that leads to higher prices.

[Plutonic Panda]

Almost all the development in OKC to date has been done by locals and none of them have any experience with mid- or high-rise.

Milhaus (LIFT) and Bomasada (Metropolitan) are exceptions and maybe after their current projects they'll consider it.

I'd like to see Milhaus take their proposal for the south of Stage Center lot to 4th & EKG or the REHCO property south of the Myriad Gardens.

wasnt there something like a Time Sqaure development LLC that bought land on that site?

[traxx]

^

Is the young lady you mention looking to buy or rent or both?

She's looking to rent. But I was just using her case as a jumping off point for discussion. We definitely want more people living downtown, but a lot of people who would like to live there are being priced out of the market. I understand supply/demand and that it's still a relatively new concept to have urban downtown living. It just seems that there's a market for nice, decent downtown living for young, unattached, childless people that isn't luxury and is reasonably priced. But so far, no one is filling that market. I'm sure it's just a matter of time, though.

And Pete, I wholeheartedly agree with your other post about 4th and EKG. That'd be a perfect spot for downtown housing.

[gopokes88]

She's looking to rent. But I was just using her case as a jumping off point for discussion. We definitely want more people living downtown, but a lot of people who would like to live there are being priced out of the market. I understand supply/demand and that it's still a relatively new concept to have urban downtown living. It just seems that there's a market for nice, decent downtown living for young, unattached, childless people that isn't luxury and is reasonably priced. But so far, no one is filling that market. I'm sure it's just a matter of time, though.

And Pete, I wholeheartedly agree with your other post about 4th and EKG. That'd be a perfect spot for downtown housing.

Level is exactly that. So is deep deuce apartments. The demand is so high it's pushing prices higher though. She is wanting to live where everyone wants to live, gonna pay a premium.

[Teo9969]

She's looking to rent. But I was just using her case as a jumping off point for discussion. We definitely want more people living downtown, but a lot of people who would like to live there are being priced out of the market. I understand supply/demand and that it's still a relatively new concept to have urban downtown living. It just seems that there's a market for nice, decent downtown living for young, unattached, childless people that isn't luxury and is reasonably priced. But so far, no one is filling that market. I'm sure it's just a matter of time, though.

And Pete, I wholeheartedly agree with your other post about 4th and EKG. That'd be a perfect spot for downtown housing.

Part of the problem is that downtown was an unmaintained wasteland for, what, 40 years? That means that everything that is being lived in right now is either going into a building renovated at a high cost or built at a high cost. That means that cheaper rents and purchase prices are not going to be a thing until 1. We're over-supplied at the high-price points (which I don' think we're really even that close) 2. Some of these units get some age and can no longer compete with newer units that are charging the same price with better amenities.

We'll have a much better idea of where things stand when LIFT, Steelyard, and Metropolitan finish up. At that point, if Deep Deuce Apartments can still charge $1.30/sf+ then that means we're still pretty far away from meeting supply anywhere.

No new or renovated housing is going to be affordable downtown, unless, like the Steelyard, they get some sort of incentive to do so.

[Anonymous.]

Even the Avana Arts District complex is getting away with around $1.50 per sqft per month and you can make a sound argument that the location is not nearly as enticing as the DD area.


Not enough supply, and the demand is there that these complexes can wait for someone who does make 40K+ per year and will rent at those prices. Right now I would say downtown living (alone) is not very feasible for anyone making less than 35K. Adding housemates or significant others obviously sways into your favor, but not everyone wants to have roommates as a young professional working an entry level job.

[FighttheGoodFight]

When we were looking to move downtown we ran into similar issues about 2 years ago.

The only places that were moderately affordable were the Regency and Park Harvey. We went with Park Harvey as the units in Regency were pretty outdated.

At the time the Legacy at Arts District (Avana now) was really nice but the price was quite high with only one parking spot.

All the newer apartments (MidtownR developments) had a huge waiting list. I'm not sure if the supply will ever catch up. Our building was 98% full. All in all I am glad we did it but the price now is getting bit a large. I'd rather buy a house and pay less in mortgage...Which I am now enjoying in Norman.

[adaniel]

I hate to sound like some cold uber capitalist type, but it's going to be very difficult to counter pretty strong supply/demand issues in this area for some time.

To add to Anon's point, there simply isn't a lot of housing for the average office drone in OKC making 35K a year (I would argue you probably need to be pulling in the 50K or above range to live comfortably and alone in this area). At the same time, DTOKC+OUHSC has the highest concentration of high paying white collar jobs in the state. So absent a massive economic collapse or exit of jobs from the core, there will always be a pool of potential renters/buyers who will keep a floor on the price. And that floor is probably not going to decrease from where we are now.

Deep Deuce itself is not a big neighborhood, only a few blocks. Outside the lots that haven't sold in the Hill, most land is pretty much spoken for. And based on the prediction for around 8-10K people living in DT+adjacent hoods in the next 5 years, that still is less than 2% of the city population. The last survey I saw indicated 1 in 10 people in OKC want to move in the core. So still a huge imbalance.

So the idea that DT will become cheaper once more inventory gets online is probably just a pipe dream at this point. A healthy urban core will simply be more expensive than its suburban counterparts; that's true everywhere. Fortunately for OKC, there are numerous adjacent neighborhoods that have a decent stock of cheaper real estate. To the OP, why not look at Jefferson Park/Paseo/Uptown area?

[Teo9969]

I hate to sound like some cold uber capitalist type, but it's going to be very difficult to counter pretty strong supply/demand issues in this area for some time.

To add to Anon's point, there simply isn't a lot of housing for the average office drone in OKC making 35K a year (I would argue you probably need to be pulling in the 50K or above range to live comfortably and alone in this area). At the same time, DTOKC+OUHSC has the highest concentration of high paying white collar jobs in the state. So absent a massive economic collapse or exit of jobs from the core, there will always be a pool of potential renters/buyers who will keep a floor on the price. And that floor is probably not going to decrease from where we are now.

Deep Deuce itself is not a big neighborhood, only a few blocks. Outside the lots that haven't sold in the Hill, most land is pretty much spoken for. And based on the prediction for around 8-10K people living in DT+adjacent hoods in the next 5 years, that still is less than 2% of the city population. The last survey I saw indicated 1 in 10 people in OKC want to move in the core. So still a huge imbalance.

So the idea that DT will become cheaper once more inventory gets online is probably just a pipe dream at this point. A healthy urban core will simply be more expensive than its suburban counterparts; that's true everywhere. Fortunately for OKC, there are numerous adjacent neighborhoods that have a decent stock of cheaper real estate. To the OP, why not look at Jefferson Park/Paseo/Uptown area?

Downtown will eventually become cheaper for rent, but that's still a ways off. I think over the next 5 years, you'll be able to find better deals occasionally in certain older developments, but still around the $1/sf range, but it will be over 10 years before we get to a place where we have enough stock to support a healthy offering of <$800/month units.

Downtown for sale is cheap right now compared to what it will be like in 10 years. If people are balking at an average of $245/sf right now, not sure what they're going to do when the averages start slinking toward $325/sf.

[gopokes88]

Downtown will eventually become cheaper for rent, but that's still a ways off. I think over the next 5 years, you'll be able to find better deals occasionally in certain older developments, but still around the $1/sf range, but it will be over 10 years before we get to a place where we have enough stock to support a healthy offering of <$800/month units.

Downtown for sale is cheap right now compared to what it will be like in 10 years. If people are balking at an average of $245/sf right now, not sure what they're going to do when the averages start slinking toward $325/sf.

I really think this a pipe dream given our current trajectory.

[Teo9969]

I really think this a pipe dream given our current trajectory.

Let me rephrase that:

Downtown will eventually have a more diverse range of rents.

We haven't by any means hit the ceiling for rents. Sometime in the next 10 years, there will be units for rent at near $3/sf. These older developments though are not going to be able to keep pace in their asking price and at some point they will very likely regress a little bit, if nothing else because there will be more volatility in the rental market downtown once this next round of megaplexes comes online (LIFT, rest of Edge, Metropolitan, Steelyard, Mosaic)

[Anonymous.]

Rent WILL go down, but it may be decades to get there.

Like I mentioned above, if you are wanting to live alone in a 1 bedroom with around 6-700 sq ft. You will need to be making over 40K per year to live downtown comfortably. You could probably do it in the 35K range, but you won't be enjoying many things that cost money. The enticement to go out and do stuff that is within walking distance, will most likely cost even more money. You can offset these costs by getting rid of an auto payment and maintenance - and paying utilities for a smaller space.

It all comes down to how you live. Living below your means is always the correct way to handle a tough financial position.

Take a recent graduate moving from Edmond and getting an entry level job downtown making around 32K (pre tax). This person wants to live downtown and walk to work. Okay they are bringing their stuff from college/home and their car. They have student loans they are paying off and a small car payment that they have been managing through working fulltime and going to school. Now buying is obviously not going to happen, so renting is the next option. If they move to DD, they will be spending 11-1200 per month in rent. That is already half of their income going just to housing. Tack on 70-100 a month for electric/basic internet (water/trash is included most places). Say their car payment is around 200 each month with 80 in insurance and another 100 for student loan. We are at about less than 10K left after common living expenses, including the car.

This is without any grocery expenses, car maintenance, drinking/dining, non-free entertainment, holiday/birthday gifts, fashion expenses, etc.

A person doing this has almost zero disposable income and it is not far-fetched at all. In order to live alone comfortably in downtown OKC, you need to make 40K+ or be lucky enough to not be completely independent.

If you are wondering how 20 year olds are living in Level and going to medical school, it is more than likely because of their parents.

[gopokes88]

Let me rephrase that:

Downtown will eventually have a more diverse range of rents.

We haven't by any means hit the ceiling for rents. Sometime in the next 10 years, there will be units for rent at near $3/sf. These older developments though are not going to be able to keep pace in their asking price and at some point they will very likely regress a little bit, if nothing else because there will be more volatility in the rental market downtown once this next round of megaplexes comes online (LIFT, rest of Edge, Metropolitan, Steelyard, Mosaic)

If what you've laid out holds true then yes, but that's ten years away. I'd get banned from the board if 10 years ago I posted on here we would have a, if not the, premier NBA franchise in 2015.

I'd put it best 50/50.
Who's to say Deep Deuce Apartments/level/etc don't get renovated in ten years and can up their prices?
What if this oil drop causes a recession?
What if in 3 years were at $200 a barrel? And $250 in 7?
What if we won 3 NBA titles in a row? (That would absolutely be a huge + for DT)
What if we have an MLS team with an incredible stadium?

There's too many factors to tell, but overall history tells us rents go in one direction. Especially in a landlocked area of DT like Deep Deuce. If rents go down in 10 years that wouldn't be a good sign for DT, especially considering with inflation the prices of goods should 50% higher then today.

[TexanOkie]

While it's not downtown, the residential neighborhoods surrounding downtown and others in the urban core still have very affordable rents--many within 2-3 blocks of walkable neighborhood centers like the Plaza District, Uptown, the Paseo, N. Walker/Crown Heights--even parts of SE Heritage Hills close to Midtown/Automobile Alley. I personally rent a good-condition 3BR house 4 blocks from the Plaza District for less than I'd spend anywhere downtown except Regency, but even then I have a lot more living space for the money.

[FighttheGoodFight]

What if we have an MLS team with an incredible stadium?

One of these is not like the others...

[betts]

While it's not downtown, the residential neighborhoods surrounding downtown and others in the urban core still have very affordable rents--many within 2-3 blocks of walkable neighborhood centers like the Plaza District, Uptown, the Paseo, N. Walker/Crown Heights--even parts of SE Heritage Hills close to Midtown/Automobile Alley. I personally rent a good-condition 3BR house 4 blocks from the Plaza District for less than I'd spend anywhere downtown except Regency, but even then I have a lot more living space for the money.

Which has always been my point. Very few cities actually have much affordable housing downtown at all. Some of them don't even have affordable housing in close-in neighborhoods. However, compared to most cities, even our expensive housing is phenomenally affordable.