Remember when falling oil ($USO) ($OIL) prices were supposed to decimate the Houston economy and take housing down with it? After posting a record December and 2014, Houston started off 2015 with rising sales and prices for its housing market.
Supply, supply, supply……it is at 2.6mos. That means there can be considerable demand destruction and we will still see rising prices.
Now, this isn’t to say that oil prices are not a factor, but it’ll take oil < $40 for a whole lot longer than a couple months (think 12 to 18mos) for there to be a material adverse effect on what is going on in Houston and especially in the Woodlands and Bridgeland where demand for housing remains very strong. Think about this, Exxon ($XOM) is moving the first of its eventual 10,000 employees to just outside the Woodlands in April. Two thousand employees are going to to be moving there and looking for a place to live...think that'll drive up demand for homes in the Woodlands? Me too.... Things will slow down from the blistering pace of 2014, but a "crash" isn't in the near future...
The Houston housing market shrugged off the frightening free-fall in oil prices and racked up a very strong January.The Houston Association of Realtors reports 4,032 single-family homes were sold in January, up 6 percent from January of last year.
The bright news for January sales comes as Houston energy companies have laid off thousands of employees and oil rigs are being mothballed. A sharp drop in oil prices — West Texas crude has fallen from $100 a barrel last summer to less than $50 a barrel today — has darkened the outlook for the Houston economy.
“There’s a lot of speculation about oil prices, but the nice homes that come on the market continue to sell.”
But so far this year, the Houston housing market has failed to comply with the negative forecasts.“There’s a lot of speculation about oil prices, but the nice homes that come on the market continue to sell,” says Houston Realtor Natalia Arjona of Re/Max The Woodlands and Spring. “Some people panic a little bit, but the demand continues to grow.”
Arjona says a few homes are even getting multiple offers when they hit the market, although that’s not as common as when home sales were on fire last summer.
“When oil prices drop, the Houston economy is OK. When oil prices are high, the economy is booming,” Arjona says.
Home prices hit record highs for a January in Houston. The single-family average price increased 7 percent from last year to $259,969 and the median price climbed almost 7 percent to $190,000, the Realtors association reported.
January is typically a slow month because the holiday season constricts the home market at year-end. There aren’t many sellers putting their homes up for sale the week before Christmas and there aren’t many buyers, either. That makes January pretty dead. It takes a while for home sales to rekindle.
But January of 2015, despite the decline in the energy industry, turned out to be the second-best January on record for Houston, falling behind only January of 2007, according to the Realtors association.