Today’s Texas Housing Less Dependent on Oil Prices
An expert with the Real Estate Center at Texas A&M University says while many may have memories of the Texas energy bust of the 1980s, that its effect on housing would be different today. Research economist Dr. James Gaines said while lower oil prices affect Texas' economic health, growing areas of the economy, such as health care, technology, trade, and professional services, have diversified the overall economy over the last three decades. "Perhaps even more importantly," he said, "the past few years have not led to excessive overbuilding or overspending as was the case in the 1980s. Oil price expectations this time were not based on maintaining the $100-per-barrel-or-higher level, thus reducing the potential negative impact on the economy." Housing markets in Texas surged in 2014. Home sales reached the second-highest level ever, and the statewide median home price set its fourth consecutive record high at $183,700. However, "At the same time, the inventory of homes listed for sale fell to new lows relative to the pace of monthly home sales. Residential markets across the state tightened as population and employment gains coupled with low interest rates to fuel housing demand." While 2015 housing prices and sales may be impacted in oil-based, local economies, overall, "The negative impacts of low oil prices should be at least partially offset by positive impacts from non-energy economic activity," said Gaines. A release by the Real Estate Center also noted Texas’ housing market has thrived under a wide range of oil prices, some lower than those seen recently.