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The Tulsa metropolitan area, which is the 54th largest city in the US, has almost 1 million people. The population growth is relatively slow. For the year ending July 1, 2014, the city registered an increase of 0.7%. The increase for the previous year was 1.0%. Census estimates indicate that the total population for metropolitan Tulsa should reach 1 million in 2017-2018.
The current population is about 71% white, with another 17% divided evenly between the African American and Hispanic communities. The median age is 36.7, which is slightly younger than the national average.
Tulsa’s economy was once heavily dependent on the oil industry. In 1980, oil accounted for about 78% of all economic activity. But this has decreased to about 18% in recent years as the area began transitioning to a more diversified economy based on industries such as aerospace, technology and finance.
The area’s Gross Metropolitan Product is estimated at $49.6 billion. That is the 53rd largest in the country.
Forbes magazine ranks Tulsa in the Top 10 US cities as being the most livable (fifth), best job environment (sixth), income growth (seventh) and cost of living (tenth). Forbes says the cost of living in Tulsa is 3.8% below the national average.
The area’s median household earnings increased 3.4% between the first quarter of 2014 and the first quarter of 2015. This compares to a 2.4% increase during the previous 12 months. The median income was $50,900 at the end of the first quarter of 2015. This compares to the national average of $54,500.
In addition, Tulsa commuters enjoy the second shortest daily commute in the US. The area has several major interstates and highways. The Tulsa Port of Catoosa is the country’s farthest inland port. It connects to the Mississippi River and the Gulf of Mexico via the McClellan-Kerr Arkansas River Navigation System. Tulsa also has an international airport.
Unemployment in the third quarter of 2015 was 4.3% which is lower than the national average of 5.3%. Significant expansion in employment is expected in 2016 with major projects opening in the retail sector as well as an increase in jobs in manufacturing and specialized positions that will be available in the aircraft industry.
According to the US Department of Labor, the unemployment rate in the metropolitan area has declined from 8.7% in 2010 (when the national average was 9.9%), to 6.3% in 2012 (8.1% nationally) and 4.8% in 2014 (5.9 nationally). This suggests that employment growth is expected to continue. While the overall unemployment trends follow the national average, Tulsa’s employment rate is usually about 1% lower.
The area’s largest employers are St. Francis Hospital, Wal-Mart and American Airlines.
Real Estate Market
National housing prices were at a high in 2006 and then plummeted until 2009 with slight additional decreases until 2011. Since then housing prices have begun rising again but are still not quite back to the 2006 level.
In contrast,housing prices in the Tulsa area have fluctuated in the past few years, but less severely than national trends. Median home prices in Tulsa, while lower than the national average, have climbed modestly but steadily since 2006. The market had slightly lower prices in 2009 and 2011 but the trend has been generally positive.
It is important to note that home ownership nationwide which was 63.5% at the end of 2014 is now at the lowest rate since the mid-1990s. While ownership peaked at 69% in 2004, the current rate is comparable to 1993. In Tulsa 53.9% of the population are home owners. That means 56.1% rent. This shows a strong rental market.
The primary source of demand for new multifamily housing is the formation of new households from population growth. The following table shows the household growth, average family size, and percentage of renters for Tulsa.
2000 2010 2015 2020
2010 2015 2020
No. Households 166,041 163,948 168,644 174,744
Average Household Size 2.37 — 2.33 —
Percentage Renters — 46.2% 46.1% —
According to the on commercial real estate, at the end of 2014 the Tulsa multifamily rental apartment market included an estimated 67,100 units in 240 properties of more than 40 units each.
Rents in the metropolitan area increased at an average rate of 2.1% over the course of the last five years, including a 3.2% increase since the beginning of 2014.
Apartment demand kept pace with deliveries on a year-over-year basis. The citywide vacancy rate of 5.8% in September 2015 is the same as the previous September.
Tulsa has had a soft rental market which is improving as both rents and occupancy increase. Due to lack of interest by large investors the market still provides slightly better yields. Most of the new construction which could have a negative impact on the rental market is in Class A units. Classes B and C are less affected.
The apartment market for the metropolitan area is relatively robust despite the overall economic conditions nationwide. The Tulsa market reported an average vacancy of 5.0% at the end of 2014 down from 9.2% in 2009 The national vacancy rate for the first two quarters of 2015 was 4.3%. This is 3.7% below the peak of 8.0% at the end of 2009.
The level of new construction in the Tulsa area is relatively high in comparison to most metropolitan areas. Further stability is expected while the economy continues to recover.
Overall Tulsa’s economy is diversified and growing. It is a market with limited demand for home ownership.
Reis anticipates the rental market in the Tulsa metropolitan area will continue its recovery during 2015.