H OUSING N EWS R EPORT
February 2016
STATE SPOTLIGHT Will Oil Slump Hurt Texas Housing?
By Octavio Nuiry, Managing Editor
With oil prices plummeting below $30 a barrel, the gleeful mood of recent years has turned glum in West Texas, the Gulf Coast and the Eagle Ford shale formation area of Texas as the frenzy of shale oil drilling has come to a screeching halt. As the price of crude keeps plunging and the oil and gas layoffs mount, more and more bad news is coming from Texas’ real estate markets. As the oil rig counts drop in the Permian Basin in West Texas, so too does local real estate prices. The hydraulic fracturing, or fracking, boom turns to a bust as gasoline prices plunge from over $100 a barrel a year ago to less than $30 now. Meanwhile, home sales are down sharply in West Texas cities of Midland and Odessa. Home sales have also slowed in Houston and El Paso, not to mention North Dakota. According to a recent report by Arch Mortgage Insurance Co., oil prices — not mortgage interest rates — may be housing’s biggest risk. Five Texas cities — Houston, Austin, Dallas-Plano,
Fort Worth-Arlington and San Antonio — rank at the top of AMI’s housing risk in the 50 largest metropolitan areas. Houston is the riskiest market this winter, with a 36 percent chance that home prices would decline within the next two years. Austin, Dallas-Plano, Fort Worth-Arlington and San Antonio all clocked in at a 26 percent risk of falling home prices. “Most Energy Patch states will experience slower economic and home price growth and a few areas may even see outright home price declines,” the report claimed, referring to oil or gas-producing states like Alaska, North Dakota, Wyoming and West Virginia, Louisiana, New Mexico, Oklahoma and Texas.
Jobs Disappear in Oil Patch
The Dallas Federal Reserve recently estimated that falling oil prices and other factors would reduce job growth in Texas overall from 3.6 percent in 2014 to as low as 1.1 percent by November 2015, or a reduction of about 149,000 jobs created.
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SOURCE: RealtyTrac
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