Oil Prices Dropping!!!!!

[Steve Rozenberg]

With the price of oil dropping, who thinks  it is a good or bad idea to invest in Houston? I have my opinion living here in Houston but am curious what others think that are not here.

[Tim Shin]

OK. I think I've written about this in several other forums about three or four times by now! Haha! But here's what it looks like for an oil & gas industry insider:

Falling oil prices are seriously hurting the O&G industry and therefore, as @Sharon Tzib suggests, potentially 50% of the Houston economy is freaking out about potential job loss and frozen wages. These people, many of whom I personally know were overbidding $40k on homes, are tightening their purses, wishing they hadn't bought that new car and new house and gone on that vacation to The Canary Islands. I don't have links for you but I like to think I'm a primary source here.

Oil prices are dropping because no one wants (read Saudi Arabia) to hold back production for the rest of the world to do well so we are in a dangerous game of chicken that will at best end with someone flinching but at worst end with bankrupt governments or shuttering of several O&G companies if we sustain low oil prices for more than 1 year. 

What is the immediate result? One of the largest O&G services companies has laid off or has announced 9000 people being laid off, BP is currently jettisoning people involuntarily and voluntarily in addition to freezing pay at its current level for EVERY employee, Haliburton has already laid off numerous people in its acquisition and merger with Baker-Hughes which just also laid off a massive amount of people, Apache is laying off at least 250 people in Houston, and many other companies are in a hiring freeze or are slowing down. This week you can expect several O&G companies to take a hit on the nose with stock prices as they announce they are not meeting their profit projections. This all results in this major sector of the work-force and home-buyers to tighten up their purses if they haven't already bunkered down in the new house they just bought. 

I think @Steve Rozenberg is right. No more outbidding on houses, maybe the cost of retail homes will drop, the insane amount distressed sellers request for their houses will go down, and buy and hold rental properties will become king if you get the numbers right as buyers turn to renters. I know my wife and I aren't buying a retail SFH to live in anytime soon now!