Editor’s note: This story is part of an ongoing series on affordable housing in Oklahoma City in partnership with the local media collaborative Oklahoma Media Center, the nonprofit newsroom The Frontier, The Oklahoman and the Oklahoma City-based magazine Curbside Chronicle.
When a faulty gas line left her without heat last winter, Valeria Lopez used her electric oven to try to keep warm at her Oklahoma City apartment.
Space heaters put too much of a strain on the old electrical wiring and she can’t risk turning on too many appliances at once or the lights will go out with a loud “pop.”
Lopez has few options when she has to move out of the Foxcroft Apartments at the end of September. Affordable housing in Oklahoma City is getting increasingly scarce. Out-of-state investors are driving up prices for single-family homes and multi-unit properties in the city, pushing low-income people out of the market. Oklahoma also has inviting eviction laws for out-of-state landlords, with few protections for renters.
Lopez lives with her adult daughter, who is pregnant, and a 9-year-old granddaughter. At Foxcroft, she pays $765 a month for rent. It’s been hard to find another home in her price range with enough space.
“There’s nowhere to go. The only thing I could do is rent a hotel room — just temporarily,” Lopez said.
The Foxcroft Apartments on NW 16 near Interstate 44 has cycled through several owners during the 10 years Lopez has lived at the complex.
An investment group with at least one member in California with vast financial resources purchased the property for $7.4 million in September 2021 and promised a multimillion-dollar renovation, but maintenance problems have persisted. Tenants are locked in a lawsuit with the new landlord over the heating problems. The complex swimming pool is still closed and filled with dead insects, even though the new owner has invested money in new equipment and decking.
Even with these issues, Foxcroft residents say rents at the complex are going up by as much as $200 a month as the landlord tries to move them into more expensive, renovated units at the complex. That leaves Lopez stranded as rents spike across Oklahoma City.
Property owner Foxcroft Exchange LLC said it has offered to move tenants without heat to renovated units rent-free until their existing leases expire. But Lopez says the offer doesn’t apply to her. Her lease agreement has already lapsed, and the new owner has repaired her HVAC system.
Maintenance problems, including no central heating and a gas line full of leaks existed before Foxcroft Exchange purchased the property, the company said in written responses to questions about living conditions. The company said former owners are to blame for the lack of upkeep.
“Committing $2 million in property improvements in less than one year is a significant development for the complex which was in grave disrepair,” Foxcroft Exchange said in a statement.
Oklahoma City sees rising housing costs
Average rental rates in the city have increased by more than 10% over the last year, according to data from the real estate marketplace company Zillow.
“We’ve got one of the fastest emerging cities in the country,” said Grant Cody, director at the Oklahoma Real Estate Commission. Investors from California, New York and Texas are coming into Oklahoma, targeting the most rundown multi-family properties to purchase, he said.
“That’s how they can make the biggest profit margin, and that’s all they care about,” Cody said.
It can be a positive for communities when new owners invest in renovations, increasing property values, said Karey Landers, executive director of the Apartment Association of Central Oklahoma, which represents property owners and others in the industry. Oklahoma City also has an overall shortage of affordable apartment units and high occupancy rates, putting pressure on rent prices.
Decades-high inflation is hurting landlords too, factoring into rent increases, Landers said. The price of pool chemicals has spiked nearly 50% over the past year. Cost increases on everything from flooring, lumber and household appliances have hit landlords hard, she said.
“Everything else is going up, and they have to be able to keep up and pay their bills, just like anyone else,” Landers said. “And that money has to come from somewhere.”
Investment firms are also scooping up a growing share of single-family homes in Oklahoma City. By 2030, institutional investors — some backed by private equity funds — are projected to own nearly half of single-family rental properties in the nation, according to one research report by Yardi Matrix.
Oklahoma ranked third in the nation last year among states where institutional investors are buying single-family homes, according to the National Association of Realtors. In 2021, institutional buyers accounted for 18% of all single-family home sales in the state. Oklahoma County had the highest share of sales to institutional investors in the state, making 29% of home buys in 2021.
Entire neighborhoods have disappeared from the city’s affordable housing inventory. Oklahoma City’s Classen Ten-Penn neighborhood was once lined with homes that sold for less than $100,000 and rented for less than $600 a month. But even people with moderate incomes are now being priced out of the area, said broker Jennifer Arsenault.
“These are wild increases, something we’ve never seen in Oklahoma,” Arsenault said. “People are completely boxed out of the market.”
As rents are going up, the cost of buying a home has gone up as well.
Arsenault has spent the past five years tracking the city’s affordability index, which is a measure of the financial ability of families to buy a home as an alternative to renting. The index shows fewer families than ever have the financial ability to purchase a house in the city as home values increase.
Even with housing assistance, renters struggle to find affordable homes
People with lower incomes struggle to find affordable rental units even with Section 8 housing assistance, said Richard Marshall, director of leased housing for the Oklahoma City Housing Authority. Section 8 vouchers are a federally funded rent subsidy paid by local housing agencies to landlords to help low-income people secure housing. More than 6,200 people were on a waiting list for vouchers as of June, and the Oklahoma City Housing Authority reports the wait for a unit can be 15 months to two and a half years.
“You’ve got a lot of outside investors coming in buying up apartment communities, and increasing the rents to a level that’s beyond what we can pay and pushing our tenants out,” Marshall said.
Older apartment communities that once welcomed Section 8 also are disappearing from the city’s shrinking affordable housing inventory.
Even with a housing voucher, it took Oklahoma City resident Krista Sullivan at least six weeks to find a one-bedroom apartment near family that she could afford. She found a place she liked in Edmond, but the property stopped accepting Section 8 vouchers after it sold to an out-of-state investor last year. Sullivan has nerve damage and deals with chronic pain, so she uses a walker to get around. When she arrived for a tour of another apartment in Oklahoma City, she discovered it was up a flight of stairs.
“I went home defeated,” she said. “Being poor sucks.”
With few other options, she decided to rent the unit. Now she takes the stairs slowly, gripping the railing, and has her groceries delivered.
Some complexes are being renovated or seeing rent hikes after being bought by out-of-state investors. Mike Buhl, owner of Norman-based Commercial Realty Resources, reported in March that investors from New York City, Dallas and elsewhere, paid nearly $1 billion buying up a record 12,113 Oklahoma City apartments in 2021.
The “We Love Section 8” banner displayed at the Grand Boulevard Townhomes, at 2269 NE Grand, came down earlier this year as new out-of-state owners evicted tenants and began renovations. The complex was once a longtime source of code complaints, with some units boarded up or in disrepair. But the rents were cheap, advertised at $529 a month in 2019.
The property sold for $2.9 million on Jan. 20. Opal Investment Group, the New Jersey real estate investment fund that owns the complex, and brokers at Dallas-based The Multifamily Group representing the property did not return calls. Opal Investment Group lists 15 older multi-family properties in its online portfolio.
A brochure The Multifamily Group sent out to market the Grand Boulevard property touted $12 million in “upside potential” if a new owner invested money for renovations, raising rental rates by up to $444 a month per unit.
Such rent hikes can be prohibitive for low-income tenants who also have trouble affording the costs of moving to a new apartment and paying for a deposit.
A single person working full-time at minimum wage would have to pick up a second job or get a roommate to afford a one-bedroom unit at $821 a month, which is what the U.S. Department of Housing and Urban Development calculates as fair-market rent in Oklahoma City.
Attorney Richard Klinge, director of the Pro-Bono Housing Eviction Assistance Program, said some landlords move tenants from one unit to another during renovations and then hike rent when the work is done.
“The rent increases are happening,” Klinge said. “When my clients’ leases are up, they’re getting huge rent increases. On lower-income people this can be really harsh.”
Few rights for tenants
Evictions are increasing as housing costs rise. In Oklahoma County, eviction filings were up 7.3% above average in July, according to data from Legal Services Corp.
“It’s a horrible problem we’re facing,” Klinge said. “We just bury our heads in the sand and don’t give people needed protections. It’s not a fair fight. The landlord has all the power and the tenant has none.”
Under Oklahoma law, the legal burden of proving that a landlord has failed to make repairs falls to tenants before they can break a lease or withhold rent without getting evicted.
Even with the state’s weak protections, Foxcroft tenants were able to get an injunction in January against the landlord from evicting them for non-payment of rent until the gas is fixed. The injunction also allows tenants without gas service to break their leases and move without penalty.
The company Foxcroft Exchange LLC has owned the complex since September 2021. Property tax, business records and a tenant’s check deposit indicate the new owner has ties to the Los Angeles-based real estate investor Jay Schuminsky, the CEO of the Mustang-based company All Storage.
All Storage operates more than 50 self-storage facilities in Oklahoma and Texas and began soliciting offers to sell the business last year in a transaction that could fetch $1 billion or more, Bloomberg reported. Schuminsky runs Lightbulb Capital Group, which describes itself as an investor in luxury apartments in “high growth markets”. He’s also written columns for Forbes offering tips on investing in commercial real estate.
In one 2019 column, Schuminsky chided landlords who refuse to do repairs and maintain real estate investment properties as “both apathetic and short-sighted.”
In response to written questions about Schuminsky’s involvement in the property, Foxcroft Exchange said it was committed to making substantial renovations to improve the property.
“We are a locally owned investment company with investors that believe in the standard of taking care of our neighbors and specifically, tenants of our properties,” the company said.
The Foxcroft tenants are being represented by attorneys Chis Cotner and Ryan Owens, who in January successfully won an injunction against the landlord from evicting tenants for non-payment of rent until the gas is fixed. The injunction also allows tenants without gas service to break their leases and move without penalty.
“They still haven’t gotten all the gas fixed,” Cotner said. “There is a dispute as to whether or how much they knew about the gas lines. The people who bought it claim they didn’t know or didn’t know the extent of the problems. But that’s not our problem, and it’s certainly not the tenants’ problem.”
Residents without gas service have been told they must move to units on the other side of the complex that have been renovated, so the landlord can eventually begin charging them rent again — at higher rates.
“Ultimately, our priority objective is to move all residents to units where central heating has already been restored,” the company said. “Moving them isn’t to force them to pay rent again but to ensure they are in the most comfortable units we can offer as winter weather approaches.”
Foxcroft Exchange said it has tried to work with tenants, but residents are also free to move.
Owens said he does not believe the rent hikes are allowed under the injunction.
“If we didn’t have an injunction in place, landlords don’t have to rent to anybody and tenants don’t have to rent from anybody,” Owens said.
Oklahoma’s weak protections for renters make it easy for landlords to evict tenants but offer few protections for tenants against landlords who fail to make repairs. Recent changes to statutes allow tenants to deduct repair costs for up to one month’s rent.
Legal representation for tenants is limited in Oklahoma and Cotner notes that many tenants don’t understand what rights they have under the law or know how to contest an eviction in court.
“If you’re not paying your rent, it doesn’t matter what the landlord is or isn’t doing,” Cotner said. “And do you have the time to show up in small claims court?”
Cody is hoping both local leaders and state lawmakers will focus on the affordable housing challenge, especially in matters involving speculative buyers and efforts to fix housing costs. He estimates thousands of residences have disappeared from the city’s affordable housing inventory.
“I don’t think we will ever get back the inventory we’ve lost with affordable housing,” Cody said. “It is gone. Those affordable homes are not coming back.”