So far, few segments of Houston real estate have felt the effects of the oil price crash more acutely than the extreme high-end housing market. Just two years ago, sellers and their agents could more or less name their price on mansions in places like River Oaks and the Memorial Villages and have clench-jawed, white-knuckled buyers lined up to outbid each other, many with cash offers ready before the properties were even listed.
Twenty months into the worst oil price crash since the 1980s, well-heeled residents of the world’s oil capital are among the hardest hit largely because tanking energy firm shares make up much of oil and gas executives’ compensation.
In River Oaks, a neighborhood of palatial mansions and lush gardens, the average sales price of a home has tumbled to $1.3 million from $2 million in the middle of 2014 when oil began its more than 70 percent slide, according to data from the Houston Association of Realtors and Keller Williams. Median property prices in the area have already fallen further in this downturn, which is not yet over, than the 16 percent drop in the previous oil slump in 2008 and 2009.
“When oil does well, River Oaks does well. When oil does bad River Oaks does bad,” said Paige Martin, a Keller Williams broker who specializes in the neighborhood. “Not everybody can afford a $10 million house.”
(Note: Reuters seems to use a broad definition of River Oaks. At the height of the boom, $2 million was chump change, barely enough to get you a teardown outside the boundaries of the district proper.)
Real estate asking prices are plummeting. Old-school white tablecloth restaurant Ouisie’s Table is offering ever-cheaper prix fixe dinners to reflect crude prices. The Houston Grand Opera is handing out free tickets to the recently-unemployed oil barons who once filled their coffers with donations. And realtors tasked with selling Bayou City’s palazzi are getting more and more creative, none more so than Diane Kingshill of Martha Turner-Sotheby’s International Realty.
Among her listings is a brand new, 7,000-square-f00t, five-bedroom mansion in Bunker Hill Village, one of west Houston’s toniest enclaves. It comes complete with custom pool, marble floors, gleaming quartz countertops, domed and coved ceilings, and deluxe appliances. Asking price is $3.9 million, and the home has been on the market since September.
What to do when you can’t move a luxurious mansion? Come up with a unique perk: in this case, a free $90,000 Tesla.
In any city other than Houston (and Midland), that would be an outstanding idea. Who doesn’t want to be the first on the block to roll around in such a revolutionary vehicle, the car with the cachet, the equivalent of an Apple product of internal combustion engine products?
It’s a little surprising “buy a house, get a Tesla” isn’t standard practice in such green friendly real estate markets such as San Francisco, Seattle, and, yes, Austin.
But this is not SF, Seattle, or Austin. This is Houston, Texas, where getting behind the wheel of an 100-miles-per-gallon electric car is little short of an act of treason, a motorized raised middle finger to the entire citizenry, something akin to blaring an “Eyes of Texas” horn in College Station.
Would an Amarillo realtor throw in a year’s supply of tofu in order to peddle a mansion to a cattle baron? In Detroit, would you throw in a BMW or Lexus in hopes of selling to a GM exec? How many luxe wine cellars are there in Salt Lake City mansions?
Teslas are nothing short of an existential menace to the Bayou City. In Houston, the better deal-sweetener would have been a Suburban (16 MPG), Escalade (15 MPG), or Explorer (16 MPG). These are the rides that keep this economy humming.