Two new reports from the Local Market Monitor say Midland and Odessa can expect a strong housing market for the next few years.

Two new reports from the Local Market Monitor say Midland and Odessa can expect a strong housing market for the next few years.

More good news about the real estate market in Midland and Odessa: two new reports from Local Market Monitor say the housing market in both markets is strong and should stay that way for the next few years.

According to the reports, home values for Midland are forecast to increase by 8 percent over the next 12 months, compared to a national increase of 4.6 percent. In the second and third years, prices are forecast to increase 9 percent each year.

In Odessa, home values are forecast to increase by 7 percent over the next 12 months, and 9 percent each year in the next two years.

Why this positive outlook on the strong housing market? Jobs!

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The Lone Star State isn’t the same place as it was during the big 1980s oil bust, and  is better weathering falling oil prices, but further price plunges and worker layoffs could negatively impact home sales and construction.

This is according to new research by Texas A&M Real Estate Center research economist James Gaines, who published Texas 2015 Housing Market and the Price of Oil last week. The six-page report explains that Texas’ economy has diversified significantly since the 80s bust, relying much more on healthcare, technology, and other sectors.

Here’s the takeaway:

The price of Texas oil and the upstream energy sector is a prime cause of concern for Texas’ 2015 economy and housing market. History shows that Texas’ housing does not depend on high oil prices. In fact, the state’s housing market has thrived at prices within a wide range of oil prices lower than those experienced in 2013 and the first half of 2014.

The saving grace for Texas right now is that the state didn’t go overboard in its response to rising oil prices in 2013 and 2014, a stark contrast to the 1980s, when there was huge overspending and overbuilding, Gaines writes.

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Impact of Texas

Let’s face it: the Texas real estate industry, and that STILL includes Midland-O,  is in Veuve Clicquot mode right now. Texas home sales had their second best year ever in 2014, selling 66,664 homes throughout the Lone Star state just in the last quarter of 2014. Almost 285,000 homes were sold in the state last year, which means 285,000 commissions for agents. And that does not include newly built dream houses.

“The fourth quarter of 2014 marked three-and-a-half years of continual home sales growth for the Lone Star State and the highest annual home sales volume since 2006 – a testament to the strong and enduring demand of Texas real estate,” Scott Kesner, chairman of the Texas Association of Realtors, said in a recent statement.

Because of low inventory, it was a seller’s market and home prices were up 7.76 percent in the fourth quarter, compared to fourth quarter 2013. The median price of a home in Texas is now $185,900.

And not to be Debbie Downer, but I am wondering if we should start to worry about that three-letter word we love so much in Midland: oil. (more…)