Things look grim for the real estate market in Midland over the next 12 months, as home values are forecast to decrease by 5 percent over the next 12 months. In the second and third year, prices are forecast to decrease 2 percent and remain unchanged, respectively, according to new reports from Local Market Monitor.
In Odessa, home values are predicted to increase by 2 percent over the next 12 months. In the second and third year, prices are forecast to increase 1 percent and 2 percent. Nationally, prices are forecast to increase by 4.9 percent.
Most worrying, the reports have called investment in Midland real estate “dangerous,” giving it a -1.7 score, on a 1 to 10 scale. In Odessa, the rating is a 1.3, putting that city in the “speculative” category.
This is a marked changed from the market of three years ago, when the investment risk for both cities was in the “low risk” category.
Home prices in Midland have remained flat, around $185,000, since Q1 of 2015. In Odessa, they have fared better, and home prices went up 6 percent over the last year. The average home price in this market is $221,907.
The market changes in both Midland and Odessa have a lot to do with job growth, or lack thereof, which is the most immediate guide to the demand for housing. The plummeting price of crude oil hit both areas hard. Investments are riskier when job growth is falling, less risky when job growth is strong.
In the past 12 months, jobs in Midland have fallen by 3.9 percent. In Odessa, jobs have fallen by 5.3 percent. This compares to a national increase of 2 percent.
The report for Midland notes over the last three years, home prices were up 20 percent, and prices are still well below the income price, showing weak fundamental demand. This means people should expect a weak housing market the next few years.