Low oil prices might be great at the pump, but they’re causing problems for Midland and Odessa housing markets according to Dr. Jim Gaines, economist at the Real Estate Center at Texas A&M University.
“When your economic base is undergoing that kind of pressure, your local market is going to feel it,” Gaines told the Fort Worth Star-Telegram.
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The Permian basin in West Texas and the Bakken Formation in western North Dakota quickly became magnets for workers, including many laborers who had been struggling to find work in the home construction industry after the housing bubble bust.
Workers stuffed hotels, sending room rates soaring, as they looked for housing. Others piled into sprawling, hastily-erected housing complexes called mancamps.
“It was not unusual to have a house on the market and, in less than a week, have multiple offers. It was a crazy market,” said Scott Kesner, chairman of the Texas Association of Realtors.
That frenzy began to dissipate early in 2015 as the slump in crude dragged on, and it has since deepened. Crude is trading near $38 a barrel, a level not seen since the depths of the recession in 2009. The energy and mining sector has shed 122,300 jobs this year, according to Labor Department data.
In Texas, no stranger to oil-related housing booms and busts, the impact so far has been most pronounced in Odessa and Midland, cities at the doorstep of the Permian, a key shale oil region that extends from West Texas into New Mexico.
Home sales in Odessa fell 10.6 percent through October this year from a year earlier, according to the most recent information from housing data firm RealtyTrac. Sales declined 8 percent over the same period in nearby Midland.
“They are going to bear the brunt,” said Gaines. “They’re right there at the point of the spear in the energy sector.”
Still, the two cities continue to have a seller-friendly four-month supply of homes for sale. That’s more than the two months they had before the oil slump, but still representative of a tight market for homes. A six-month supply of homes is what economists consider a balanced market.