By Patrick B. McGuigan
Oklahoma City comes out as, arguably at least, America’s most economically secure community in a recent analysis from a writer for the Urban Institute, ranked the nation’s best place in terms of economic security.
The analysis from Margery Austin Turner appeared in mid-December on the institute’s MetroTrends Blog.
In a reaction sent to The City Sentinel, Roy Williams of the Greater Oklahoma City Chamber of Commerce said, “It is a reflection of what we’ve seen the last couple of years in the economy and how different Oklahoma City and the metro have been from the rest of the country. Our unemployment continues to be among the lowest, our housing market has held up better than almost anyone else, and our cost of living continues to be extremely competitive.”
Turner writes in the Urban Institute analysis, “Metropolitan Oklahoma City’s diverse economy – including government, universities, energy, and high-tech firms — has held up well in the Great Recession. It didn’t fall victim to the housing boom and bust (2000 to 2007), so rents, house prices today are remarkably affordable, and few homeowners are facing foreclosure. And the region scores high on lots of ‘top ten’ lists.”
She points specifically to “most affordable” and “most recession-proof” listings from Forbes magazine, the Fortune Small Business’ assessment of best places to start a small business.
Turner said she undertook her analysis due to the widespread news coverage of the “Occupy Wall Street” movement and its categorization of most Americans as belonging in the “99 percent” in contrast to the richest of the rich, the “1 percent.”
She writes in her blog, “In the decade preceding the Great Recession, I was monitoring housing market trends in the Washington, DC metro area. The region’s economy was booming, population was expanding, and house prices were sky-rocketing.
“Well-educated people could get great jobs with high pay. But people working low- and medium-wage jobs had a tough time finding affordable homes and apartments. Even so, Washington seemed like a good place to live: unemployment was low and earnings were well above the national average – even for jobs at the bottom of the wage ladder.
“Recently, the Occupy Wall Street protests have made me wonder whether the most prosperous metros – New York, D.C., and San Francisco, for example – are really good places for the 99% to live. Despite the crash, housing prices and rents there remain high. Skilled professionals can probably earn enough to cover housing costs (if they can find work), but lower skilled workers face a real pinch.
“Take a look at a few numbers. If you live in the DC metro, you need to earn about $60,000 to afford the rent for a typical (modest) two-bedroom apartment. Average earnings just barely exceed that threshold. If you’re a computer professional, you probably earn much more (over $90,000 on average), but if you’re a personal service worker, you may only earn half of what you need to afford that apartment. Disparities are equally stark in San Francisco, but the unemployment rate there is almost 10 percent, compared to only 6 percent in the Washington region.”
Turning to Oklahoma City, Turner observes, “One region that looks good on these metrics is Oklahoma City. Somehow, it avoided the excesses of the boom years, and its economy has weathered the downturn better than most. Housing costs are low, and though wages are too, a personal service worker can almost afford the rent for a two-bedroom apartment. And at 5 percent, Oklahoma City’s unemployment rate is among the lowest in the country.”
Turner is candid about her benchmarks in the analysis, and in fact invites other analysts to change as they see fit her weighting of key factors to reach their own conclusions.
Oklahoma City gets a letter grade of “A” for home price erosion, which she pegs as “The change in home prices from the peak of the housing bubble, the second quarter of 2007, to the third quarter of 2011.” She notes that erosion in the city was -8.8 percent. Turner’s benchmark for this data point was the Federal Housing Finance Agency House Price Index.
For unemployment rate (where the city also gets an”A”), she uses the Bureau of Labor Statistics data for September, when unemployment was 5.5 percent, astounding low in comparison to the rest of America.
(Worth noting is the fact that Oklahoma City’s jobless rate has increased since the fall – yet, in a paradoxical twist still positive for the Sooner State’s capital city, economists looking at the local rate conclude that the rate increased because previously discouraged workers [those who had dropped out of the ranks of job seekers] are again seeking work.)
The city also gets an “A” for housing affordability, because the income needed in Oklahoma City to afford “the fair-market rent of a 2-bedroom apartment” as of 2010, when divided by the average 2010 earnings of low skill workers, had nearly a one-to-one relationship in terms of affordability (and percentage of income).
The income needed to afford a two-bedroom apartment also earned Oklahoma City an “A”, based on Turner’s analysis of information from the National Low-Income Housing Coalition. The key assumption Turner makes for this portion of her analysis is the coalition’s, namely “that a rent equal to or below 30 percent of income is affordable.” In Oklahoma City, the average low-skill job paid $24,950, while the income needed for that two-bedroom abode was $26,480.
For serious mortgage delinquency rate – the percent of mortgages 90 days or more past due or in the process of foreclosure as of March of this year – Oklahoma City again scored an “A” because only 6.6 percent of mortgages were in such status.
In the end Turner’s analysis led her to rate Oklahoma City as the best of all the 100 metropolitan areas she studied. Her assumptions are freely shared and can be calculated with different weighting, but our community would clearly emerge at or near the top in virtually any mix of the factors sketched above.
Turner ultimately lists what she asserts are the ten best metro areas for economic security: Oklahoma City, Omaha, Wichita, Tulsa, Des Moines, Pittsburgh, Madison, Austin, Baton Rouge, and Buffalo. She lists the ten worst as Bakersfield, Palm Bay, Tampa-St. Petersburg, Lakeland, Bradenton-Sarasota, Riverside-San Bernardino, Orlando, Modesto, Stockton, Miami, and Las Vegas.
Turner, who is Vice President for Research at the institute, promised to continue buffing the data for further understanding about Oklahoma City’s positive outlook.
National analyst ranks city #1 for economic security
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