Impact of crude oil prices on Texas RE

12 Replies

Hi,

Just curious. Is there any connection between Texas house prices/ rents and the crude oil markets? Are they correlated?

Thanks. 

The short answer is no. As oil prices have been dropping over the last year or so home prices in Texas have been climbing. Texas has a very diverse economy now because of that oil no longer has the effect it once had on the economy here. 

@Hersh M.

I agree in the large cities it doesn't have much affect.  Certain communities such as Midland or Odessa are seeing a measurable slow down in growth and, IMHO, will see a decline if energy prices stay at or below current levels.

No effect so far in Houston.

Texas is diversified in the energy sectors as well so as mentioned not totally gas dependent for the local economy.

For investing I like areas there with median income average over 100,000. I do not like the rural areas with growth on the fringes. Any little blip and those are heavily affected versus the strong urban core and suburban locations that might have a bump in a down turn but not a collapse.

In cycles rural type markets are the first to collapse and the last to rise with improvement. Those are meant more for local investors creating a generational legacy footprint in those towns and understand the nuances of owning property there versus outside investors.    

Great! Thanks Everyone! 

There's definitely a correlation in certain areas, but you'd have to be specific about the city you're looking to invest in. I doubt you'll see any effect in Dallas, Austin, or San Antonio where the economies are far more diversified. 

As others have mentioned, areas such as Midland, Odessa, or anywhere in the Eagleford Shale region will be majorly impacted because a large percentage of those employed there are in Oil and Gas. 

Houston could definitely be affected if there's a long term dip in the price of oil. You're not going to see an immediate change in housing prices because the economy is still strong, but if there are continued layoffs it's going to slow.

Agree with the above posters that the big cities will see little affect and that the heavy oil producing areas probably will be affected.  Upside is that $2 per gallon gas and diesel will have a positive affect.  More $$ in every driver's pockets.  

The bust is impacting small regional banks for sure.  They have money tied up in oil and gas operations and several have become more conservative of late.

The large cities in Texas generally are pretty diversified across economic sectors and are unlikely to suffer a lot from the dip.  Houston probably has the biggest oil and gas industry among the large cities and the slowdown will likely impact it the most among the big cities.  As others have mentioned some cities are very heavily tied to the industry and will likely suffer more.  

I'll put the link below to an article that talks about this, but basically we have not seen home prices be affected, but as an agent working for a larger wholesaler I can definitely tell that market sentiment for investors has shifted. Not to panic mode. More like cautious mode. 

Link below

How the oil slump is affecting residential real estate in Houston

I'm looking at a foreclosure at the country auction tomorrow.  doing my research, the owner of the house being foreclosed on is the president of a small oil related company. I have had several neighbors in the oil industry laid off but they have managed to find other jobs. Things aren't selling here as well as they where last year.  I think there is a little softening on the horizon. Ready for some deals. 

Hi yall.  I live in Midland and the housing market has slowed some but not too much yet.  I believe it has peaked here and is starting to come down.  Apt rents are lowering and there are more homes coming up for lease or staying on the market longer. But,  home prices haven't moved too much, yet......we will patiently wait to see.

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