Is Oklahoma Land a Good Investment?

Oklahoma's diverse landscape and robust agricultural sector have long attracted investors looking to capitalize on raw land opportunities. As of 2022, the average price of cropland in Oklahoma was $2,220 per acre, while pastureland averaged $1,590 per acre, according to the USDA National Agricultural Statistics Service. Notably, Oklahoma State University's Department of Agricultural Economics reports that farmland values in the state have shown steady appreciation over the past decade, with an average annual increase of 3-5% in most regions.

These trends, coupled with Oklahoma's relatively affordable land prices compared to neighboring states, have sparked interest among both local and out-of-state investors. However, potential buyers must carefully consider various factors such as location, soil quality, water access, and intended use before determining if Oklahoma land truly represents a sound investment opportunity.

Introduction to Oklahoma Real Estate Market

Over the past decade, Oklahoma has seen steady real estate growth, especially in urban centers like Oklahoma City and Tulsa. The state economy is strengthening with expanding jobs in sectors like aerospace, energy, manufacturing, and technology. Reasonable property prices coupled with low taxes and incentives continue attracting new residents and developers.

This flourishing economy filters down to impact land values across the state. Whether you want to invest in Oklahoma real estate directly or see vacant plots as flippable assets, location and market conditions play key roles.

Evaluating Key Factors for Oklahoma Land Investments

Like any real estate purchase, assessing the profit potential of Oklahoma land requires weighing several variables:

Location

Where the property sits geographically determines what you can do with the land and the demand from buyers. Parcels around developing areas near Oklahoma City offer solid investment upside for future housing, business sites, or commercial endeavors. In rural settings, you’ll find cheaper land deals but fewer prospects unless oil/gas rights or farming uses apply.

Land Values & Appreciation Trends

In 2019, Oklahoma had a median land value of $2,350 per acre. Values differ widely based on whether the setting is urban, suburban, or rural. Overall, the state has seen consistent appreciation in land prices over the past decade. Even during U.S. housing market declines, Oklahoma land values steadily rose around 4-6% annually.

State Tax Policy & Incentives

Oklahoma policies like tax abatements, Opportunity Zones, and other growth incentives further boost real estate profitability. Land owners can capitalize on various federal/state programs offering tax breaks for meeting development goals. One example is rural Investor Incentives paying cash rebates when improving unused plots.

Infrastructure Access & Development Potential

Compare area growth forecasts to see where future housing, roads, utilities expansion, or community upgrades may occur. Land parcels near planned infrastructure routes or those allowing housing add subdivision potential. Other zoning factors like water access or resource rights also raise marketability to buyers.

Ease of Transactions & Holding Costs

The process to buy, sell or lease Oklahoma land falls on the moderate side compared to other states. Title paperwork and legal requirements don’t pose excessive burdens. Property taxes are also affordable, averaging 0.75% of assessed value. This keeps carrying costs lower for long-term land investments.

Risks & Considerations

No investment comes without risks—even land ownership. Here are a few things to keep in mind:

• Market fluctuations - Local or regional slowdowns may impact short-term value. Plan to hold land longer-term.
• Rural factors - Remote parcels have fewer buyers. Check access, oil/gas potential, water rights.
• Expenses – Budget for some taxes, maintenance fees, real estate commissions when selling.
• Natural disasters – Oklahoma sees extreme weather including tornadoes, floods, and hail storms.

Despite a few cautions, Oklahoma offers appealing stability for real estate investing. The state maintains business-friendly policies, steady growth, and diverse markets distributing risk. Now let’s examine both sides—reasons why Oklahoma land works as an investment and possible arguments against it.

Why Consider Oklahoma Land for Investment? 

Pro: Strong State Economy & Job Growth

Oklahoma sits in America’s Heartland where agriculture and oil/gas production help drive GDP. The state fosters a pro-business climate listed as #4 nationally by the American Legislative Exchange Council. Since 2010, Oklahoma expanded jobs at 9.7% growth. From 2010-2020, Oklahoma City and Tulsa added over 150,000 new residents. This vibrant economy and population growth feeds the real estate market.

Pro: Affordable Property Prices

Part of Oklahoma’s appeal comes from reasonable property prices coupled with cheaper building costs than many states. As examples, average home prices run almost $100,000 less than the U.S. median. Raw land prices can start around $1,500 per acre in rural zones. Investors benefit from this value pricing to find profitable deals.

Pro: Favorable Location for Business

Situated in central U.S., Oklahoma provides easy transport and distribution channels. Interstates 35 & 40 intersect meaning 85% of the country falls within a two-day truck drive. The state continues investing in transport too—commencing railway projects from the inland Port of Catoosa to coastal ports.

Pro: Incentives for Real Estate Development

Besides low taxes and right-to-work employment laws attracting firms, Oklahoma utilizes various incentives to nourish economic growth. Examples include Rural Economic Development Loans helping small towns. Tax increment financing also encourages developing vacant land plots in Opportunity Zones or specified districts. These perks make projects here more profitable.

Pro: Strong Retail & Commercial Real Estate

Both commercial building activity and retail real estate show favorable upside thanks to expanding population and job numbers. Oklahoma commercial market vacancies keep declining to reach 10-year lows around 4-5% as of 2022 reports. Steady demand makes commercial/retail assets profitable plays for investors.

Pro: Value-Add Potential to Boost Profits

Savvy investors can further boost land profitability through value-add upgrades or strategies. Examples include zoning variances allowing new property uses, extending infrastructure access to open adjacent lots, adding utility hookups to increase site appeal, or securing mineral rights inclusion.

Why Oklahoma Land Might Not Work as an Ideal Investment

Con: Rate of Appreciation Lags Some States

While Oklahoma has notched consistent land value gains year-over-year, its pace trails leading markets. Areas like Idaho, Tennessee, Florida as examples have frequently posted double-digit annual appreciation over the past decade. Oklahoma sees more modest but steady 4-7% yearly boosts on average.

Con: Some Rural Zones Have Stagnant Growth

Parts of western Oklahoma face population declines where communities depend on agriculture. Buyers may be scarce for isolated parcels or farms without oil/gas mineral rights included. Check regional planning reports before investing to avoid stagnant rural locations lacking infrastructure upgrades.

Con: Amenities Scarce in Lesser-Developed Areas

Aside from Oklahoma’s two major metros—OKC and Tulsa—smaller towns offer limited dining, arts, and retail amenities. This can deter resident attraction. Ensure the land location aligns to areas forecast to see future housing and infrastructure expansion when evaluating its resale potential.

Con: Extremes in Weather, Natural Disasters

Oklahoma’s central geographic location lends itself to weather extremes. The state sees ice storms, flooding rainfall, punishing hail, and of course—tornadoes. From land erosion to property damage, natural disasters pose investment risks real estate investors must weigh. Proper insurance helps hedge this factor.

Key Takeaways – Who Should Consider Oklahoma Land Investments?

Based on the points we’ve covered; Oklahoma land represents a solid real estate investment opportunity for certain investor profiles including:

• Those seeking long-term holds for future development plays
• Investors able to upgrade land for uses like housing sites or commercial buildings
• People wanting geographical diversification beyond coastal markets
• First-time real estate buyers on tighter budgets
• Businesses planning distribution logistics centers given Oklahoma’s transport hub location

Conversely, Oklahoma land appeals less to high-net worth buyers focused solely on short-term profit flipping or rapid appreciation potential exceeding 10% yearly.

Is Oklahoma land a worthwhile investment option? 

Consider your investment timeline and risk factors. Oklahoma real estate offers affordable entry points to gain consistent value appreciation over longer-term holds. The state’s central location, friendly business climate, housing demand from a growing workforce, and real estate incentives stack up in Oklahoma’s favor for many investors.

Perform due diligence assessing area growth potentials and feasible land usages. Pinpoint parcels exhibiting future development opportunities or value-add prospects to profit most from Oklahoma’s stable real estate environment. With strong property fundamentals, Oklahoma represents an underrated gem for land investors who conduct research and follow growth trends across different state regions.

Final Thoughts

When weighing the potential of Oklahoma land investments, the state presents compelling value relative to risk. With affordable property valuation compared to many U.S. markets, Oklahoma real estate lends well to longer-term holds. For investors able to upgrade land assets, ample incentives and steadfast infrastructure development generate attractive ROIs across both metro vicinity and strategic rural plots.

Population and job gains tracking above national averages fuel real estate across diverse sectors from housing to retail and logistics real estate. Although Oklahoma sees lower property appreciation than some up-and-coming states, its central location and pro-business strengths balance shorter-term hindrances. Investors planning appropriate hold times, targeting growth zones, and utilizing value-add tactics should capitalize on Oklahoma’s investment-worthy real estate environment in the years ahead.

Frequently Asked Questions (FAQs)

Does Oklahoma land typically increase in value each year?

Yes, Oklahoma has seen consistent land appreciation averaging 4-7% annually over the last decade. Value gains held steady even during broader U.S. housing declines through careful state economic development.

What Oklahoma land price per acre is considered a “good deal”?

In rural zones, buying land for under $2,000 per acre often meets investor targets. Around developing areas, well under $15,000 per acre proves an attractive entry point if commercial or housing potential seems feasible longer-term.

What factors most impact Oklahoma land values?

Key influences on Oklahoma land prices include proximity to growing metro areas, highway/infrastructure access that supports development, mineral/oil rights, land usage zoning potential, and availability of utilities.

Does raw land or acreage require high maintenance costs in Oklahoma?

Oklahoma levys lower property taxes than most states, averaging 0.75% of assessed land value annually. Aside from minimal taxes, raw land requires little maintenance—making it more passive than other real estate.

What risks face land investors buying property in Oklahoma?

Severe weather events like tornadoes or flooding pose risks with damage potential. Slowing population declines in some rural towns also limit land value gains. Research location outlooks and buy proper insurance to mitigate concerns.

‍