Oklahoma has been the epicenter of the nation’s oil and gas boom in recent years, making it the fifth-biggest oil producer in the country, and fourth-biggest natural gas producer, according to the U.S. Energy Information Administration.
Hydraulic fracturing, or fracking, the method of extracting natural gas from shale rock, was invented in Oklahoma by Pan American Petroleum in 1968, and since then, the number of firms – and investment dollars – dedicated to this industry has jumped in the Sooner State.
Oklahoma’s real estate market has seen major benefits from the expansion of the oil industry. According to a NerdWallet analysis, there’s a correlation of 0.93 — 1.0 is perfect — between the Zillow Home Value Index for Oklahoma and the number of employees in the nation’s oil and gas sector since 2000.
For buyers looking to invest in Oklahoma real estate, the combination of some of the lowest property taxes in the nation, and the strength of the U.S. oil industry, indicate that the state likely will continue to be home to a strong market.
NerdWallet crunched the numbers for 74 places to find the cities and towns that are likely to be the best for real estate investors in Oklahoma.
Metro Oklahoma City is booming. Six of the top 10 places are within 40 miles of Oklahoma City, the economic heart of the state and home to Fortune 500 companies, including Chesapeake Energy and Devon Energy.
Not just big cities. Three places in the top 10 have populations under 10,000 —Cushing, Purcell and Wagoner — while three have populations over 30,000 — Shawnee, Moore and Stillwater — so investors will find options.
Affordable communities. The average sale price per square foot in the top 10 is $70.53, which is 14% below the statewide median of $82.25.
What we analyzed
Market health. We looked at how quickly houses sold compared with other cities in the state.
Price per square foot. Weighting for affordability, we measured the price per square foot of housing in a city, averaging all of 2013 and 2014 to avoid seasonal fluctuations.
10-year housing price change. Averaging monthly price data since 2004, we examined the percentage of houses that increased in value over the past 10 years.
Property taxes. Using state data, we calculated the city and county property tax for each city.
Change in vacancy rate. We used U.S. Census Bureau data to see how vacancy rates have changed from 2010 to 2013.
Our list of the best places to invest in real estate in Oklahoma doesn’t include cities and other communities with incomplete data. We also didn’t include places with residency restrictions, such as American Indian reservations and retirement communities.
To see the full data set, click here.
Best places to invest in real estate in Oklahoma
Cushing may be best known by commodity traders and markets junkies for its role in oil trading, but it ranks as our top place to invest in real estate in Oklahoma because of its affordability and growth in home values. Cushing’s $41.78 per-square-foot sale price from 2013 to 2014 is the lowest in the state, and 61.54% of homes increased in value over the past decade, the second-best mark in the top 10.
With a population of 6,175, Purcell is the smallest town in the top 10, but its recent momentum in real estate markets helped push it up to the second spot on our list. Purcell saw the biggest decline in vacancy rate in the state from 2010 to 2013, with the number of empty units falling 7.9% over the period. It is also one of the fastest-growing towns in the top 10, with a population increase of 6.37% from 2010 to 2013.
3. El Reno
El Reno’s downtown has been the focus of a redevelopment program in recent years, and it is now the cultural and economic heart of Canadian County. Its property market has remained affordable, with a $61.64 per-square-foot sale price in the past two years. El Reno, which sits on historic Route 66, also benefits from its location only 31 miles from downtown Oklahoma City. El Reno ranked fifth in NerdWallet’s Cities on the Rise in Oklahoma.
While Shawnee can take credit for giving us Brad Pitt, the town can be given credit for the health of its local real estate market. The sale price of $62.37 per square foot is among the lowest in the top 10, and vacancy rates have dropped 1.2% in recent years. Shawnee’s downtown features a number of elaborate, historic buildings that date back to the area’s oil boom in the early 20th century.
Guthrie is a critical piece of Oklahoma history: it was the state’s first capital and it was quickly developed after President Benjamin Harrison encouraged settlement in the Territory of Oklahoma. The town’s history is still on display today, with its turn-of-the-century architecture that defines the downtown, which is designated a national historic landmark. Guthrie’s property market is thriving as well — it has the second-highest market health score in the top 10.
Read more at nerdwallet.com.