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Houston’s Real Estate Market Feeling The Effects Of Oil’s Price Drop

Don’t be fooled by claims of economic diversification—the city still runs on oil.

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Flickr Creative Commons/Katie Haugland

They said it’d be different this time, but it appears that Houston real estate is at a tipping point. The oil price crash is just beginning to be felt in the market, which has until recently proven inexplicably resistant to a severe and increasingly prolonged downturn in the city’s primary economic driver. Housing costs are at or close to all-time highs, so much so that a study from Rice University’s Shell Center for Sustainability found that Houston has crossed the line from affordable to unaffordable in the past year.

Despite the fact that a barrel of crude—Houston’s lifeblood—is now going for about $45 a barrel.

As a man who spent his formative years growing up in Houston in the eighties oil bust, these high real estate prices seemed like magical thinking at work. Detroit real estate did not boom when GM went bust, nor did Pittsburgh or Cleveland’s markets when the American steel industry cratered. As for Houston, you keep reading that it will be “different this time,” that the Energy Capital of the World’s economy has “diversified,” as locals have been reassured ad nauseam since crude went into its spiral.

But many of the rumors concerning Houston’s diversification have been greatly exaggerated—the economy is little more diversified than it was in the days of Ronald Reagan, Max Headroom, and Duran Duran. The diversification claim is typically made as if its reality were simply obvious, as if area booms in construction, shipping, retail, real estate, and the hotel and restaurant biz did not all trickle down from a booming petrochemical industry.

When defenders of Houston’s diversification do bother to state exactly how our portfolio is varied, they invariably cite the growth of the Texas Medical Center. Nope. Houston remains the “Petro Metro,” as it was once called in a (thankfully) failed grassroots (gas-roots?) branding campaign. According to a March report by Auction.com, the Mighty Med Center’s expansion is dwarfed by that of good ol’ O&G.

Back in 1985, in some of the darkest days of the worst oil bust in living memory, healthcare’s share of Houston’s total economic earnings was 5.3 percent. Oil’s was ten. By 2013, healthcare had risen to 6.7 percent, but O&G had risen even more, to 13.9 percent. That’s right. Oil’s share of the local economy is even greater and proportionately higher than medicine’s than it was in the oil bust. And of the 25 Fortune 500 companies based in Houston, only three are not in energy-related.

And now news about the real estate market is starting to fall into line behind the bad reports from the oil patch and the Louisiana Street boardrooms.

Housing market shows further weakening,” reports the Houston Chronicle:

John Byerly has been selling real estate for more than four decades and he knows that when a house sits on the market for any length of time people often assume there’s something wrong with it and will pass it by.

He also knows it can take a little longer to sell a house in the fall after school has started.

And he’s well aware that in Houston, as goes the price of oil, so goes the housing market.

“As long as (oil) stays at $100 a barrel, no problem. People are just spending money like there’s no tomorrow,” Byerly said. “When it gets down to $35, $40 dollars a barrel, welcome back to the real world.”

With crude prices now in that range, Byerly and others like him are dealing with what increasingly seems to be a new reality for Houston real estate.

The far northern ‘burbs were supposed to explode in the wake of Exxon’s huge new corporate campus going in near the Woodlands. It hasn’t happened:

“The Exxon Effect is slower than expected,” said Lawrence Dean, senior advisor with Metrostudy Corp.’s Houston office, a housing research firm. “It’s caught a lot of developers and builders by surprise.”

Instead of immediately buying homes in the north Houston suburbs, new Houston energy transplants are signing nine- and 10-month apartment leases. These new residents want to learn their new city and figure out where to settle down, Dean said.

They have a great many apartments to pick from, as a spokesman for the Greater Houston Partnership fretted openly about Houston’s new abundance of luxury, upscale apartment complexes and other things:

“I’m very concerned about the overbuilding in apartments,” said Patrick Jankowski, senior vice president of research at the Greater Houston Partnership. “I’m very concerned about the overbuilding in office space. I’m concerned that the dollar will continue to strengthen.”

News radio station KTRH reported along similar lines:

While earlier reports suggested Houston’s real estate market was withstanding the oil decline, the effects are now starting to show.  “I’m seeing not only new construction not being bought up, but I’m seeing a slowdown in the resale market,” says Michael Weaster, realtor with Xcel Properties in Houston.  “There are more houses coming on the market, and I see prices either stabilizing or coming down…I’m having trouble getting some of my listings sold.”

Weaster says it was only matter of time before all of the recent layoffs in the energy industry brought on by the drop in oil prices started to trickle down to housing.  “It’s got to mean something when Chevron announces all these layoffs, Shell announces all these layoffs in the energy business—these jobs are not replaceable.”  And with the price of oil showing no indication of a significant increase anytime soon, Weaster predicts home sales and prices will continue to decline in Houston for the near future.  “They say Houston isn’t tied to oil as much as it was in the 80s, but that just isn’t true in my opinion,” he says.

Houston old-timers promised God that if they were given one more oil boom, they wouldn’t screw it up the next time. He gave us one, but it’s looking like we screwed it up again.

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  • John Isgitt

    I wonder if this writer checked with the Real Estate Center at A&M. According to their stats the state median home price is up 7%, Houston is up 6%. It may be growing at a slower rate but it is still up.


    • of course not… but he is a expert on #Houston dive bars

      • John Nova Lomax

        Here is then full headline you are using to counter my article:

        Texas home prices rise as Houston flattens

        • First of all will apologize with the tone of my comments, it was somewhat unprofessional. That being said, I still agree with the message of the article at least as I interpreted it. However we may be arguing about shades of grey. I study the commercial real estate market as diligently as anyone. My wife sells homes. They are still getting multiple offers on most homes. Is it as frothy as it was? … of course not. I think I have a pretty good handle on what is happening working with many of Houston’s leading companies with their corporate real estate requirements for 25 years and have access to considerable unbiased data. I don’t have my head in the sand and will be the first to acknowledge Houston has many rah rah cheerleaders who at the beginning of the recent oil crunch were acting as if the impact would be minimal. They are wrong. The Up-stream, Mid-stream and Down-stream energy business has many facets. My point is to compare Houston Economy of 2015 to 1985 is quite a stretch. If I interpreted the intent of your message incorrectly then that’s my fault. There is some softness in the market, but fundamentals are still relatively healthy at the moment on most fronts: housing, office, industrial, and retail. Office is overbuilt in West Houston/Energy Corridor. New Development has pretty much stopped for the moment. Projects that were already started will be completed. We reached the peak of the cycle, there is a correction happening now. In my professional opinion it won’t be severe, unless additionally also slip into a national recession.

          The sky isn’t falling…. and for the anonymous anti-realtor crowd. I earn income in good and bad markets and my opinion is not rooted in any conflict of interest. Bad markets create opportunities to dispose of excess real estate for corporations.

          Again, my apologies for the tone of comments. We can agree to disagree on the state of the Houston real estate market.

  • Pryorok

    In May 2015, Fitch’s rated Houston as the 7th most overvalued real estate market in the United States. Fitch’s provides international credit ratings for bonds. Unfortunately, Houston is experiencing a housing price bubble and the city is headed towards a nasty recession.

    • LAS

      You do realize that Fitch is the same agency that gave securitized mortgages (mortgage-backed securities and collateralized debt obligations) AAA ratings. Months later they were then considered toxic assets. So, what’s your point?

      • XLK

        They learned a lesson after suffering reputational & monetary consequences from the crisis. Fitch is cautious. Their analysis of the Houston real estate market is credible and backed by fact, and it is certainly less biased than real estate brokers.

  • Another journalist who knows nothing about the Houston real estate market. is it pretty ?… no but 2015 and 1985 look nothing alike.. BTW have been around for both… he should stick to writing about Houston’s best dive bars

    • XLK

      Your attacks on the journalist’s credibility are baseless and lacking substance. Oh wait, you probably depend on real estate transactions. #Biased

      • FranchiseAJ

        Go check the facts that he quoted from the Greater Houston Partnership… If you read past the first page (as it’s clear this Journalist never did) it shows quite the opposite of what the article leads. Construction is still increasing, slowdown? yes – but still increasing. Real estate rental and leasing is still increasing, slowdown? yes – but still increasing. Obviously with the spike of oil things are slowed down, but to try to make the claim that this is similar to the 80s is crazy. The economy in Houston has diversified since then, whether big oil, journalists like this, or XLK wants to admit.

        • XLK

          Your publication is written by the biased Greater Houston Partnership and it is largely a forecast. Their goal is to promote Houston! Also, it’s nearly 10 months old; oil prices are materially lower than then. The other industries claimed for diversification are connected to increased employment in the oil sector. In addition, the high paying jobs that are now being lost make up the people that could afford current real estate levels.

        • John Nova Lomax

          In July, the Greater Houston Partnership slashed their December forecasted job growth estimate of 64000 all the way down to the 25K range, and now they are openly saying even that number might be optimistic.


          According to Robert Gilmer of the University of Houston’s Bauer School of Business’s Institute for Regional Forecasting, if we extrapolate Dallas Fed data through the end of 2015, Houston will show a total of only about 9,000 new jobs created, with a loss of about 19,000 in construction and mining (read: oil).


          That report assumes a gain of about 13,600 jobs in leisure and hospitality, and that sector of the local economy, heavily dependent on O&G as it is, is just starting to show its own signs of softness, even as 10,000 new rooms are about to come online:


          Back in December a lot of us thought the price of oil was about to rally.

          It hasn’t and it is not showing any signs of doing so now.

        • Pryorok

          It’s the “Great Houston Partnership” and their sole purpose is to be the cheerleaders for Houston.

    • Brandon

      Another real estate consultant who has no obvious conflict of interest.

    • John Nova Lomax

      I lived through both too. I lived with my grandparents back then and my grandfather was a real estate agent. Hard times.

      Anyway, I never likened this to 1985. It’s more like 1981. The bad times have just begun.

  • XLK

    Finally an article that speaks the truth! Realtors are biased towards higher prices as they’re paid commission as a percentage; they keep trying to talk up the market when fundamentals don’t look so great. Also, the HAR stats are lagged; the monthly press release is nothing but a cheerleader. Months of inventory assumes prior 12 month demand continuing when it can quickly reverse. This run up was a bunch of hype playing on fear. Now let’s watch the fall down to reality. It appears more sellers are rushing to market to realize equity gains only adding to supply and chasing prices down competing with their neighbors and new construction. Drive around and visit open houses this weekend, and you’ll see this first hand. Realtors sound desperate for offers.

    • Kelly Kline

      I can attest to what XLK said. I see over triple the amount of open houses now as compared to 2 years ago. The real estate agents are way more aggressive now too – they kept calling me, asking for follow-ups, being extra-extra nice (2 years ago they wouldn’t even return my calls). One even tried appealing to my sexuality believe it or not! The agents also play tricks whereby they would close the HAR listing and reopen it the next day to artificially reset the “Days on Market” figure. Almost every seller I talked to said oil prices have no effect and that the homes will sell fast. They will also try to sell me the story of how interest rates are going up and that the best time to buy is now. I have not met an honest real estate agent here in Houston. They’re just like car salesmen, make the sale no matter what and they’re getting desperate. Well, the homes I saw are still open after more than 4 months on the market. I’m sure some poor fool will fall for their tricks. Good luck!

      • XLK

        I also noticed that some builders with multiple completed identical homes only list one on MLS to withhold supply. (Or list one for awhile, take it off, then list the one next door)

  • The layoffs have only started. Wells are being shut in all over the country due to low oil and natural gas prices. In one way or another there is a job in Houston that is tied to them. Houston is in for a rough road ahead. Realtors know nothing. I have rarely seen any realtor ever take a serious look at the fundamentals of the economy. They are a typical car salesmen.

    • FranchiseAJ

      Maybe a single family residential commission sales based realtor has never looked at the fundamentals of the economy? The capital market analysts, investment analysts, debt equity analysts, that work for large real estate developers entire job is looking at the fundamentals of the economy…

      • XLK

        A realtor certainly isn’t going to say prices are going down. They would choose to ignore the fundamentals rather than vocalize them for sure. Much of the current development acquired financing prior to the oil bust and will only add to the oversupply once completed.

  • LisaB

    As a Houston residential REALTOR I can either be offended by people that don’t know me and lump me into a stereotypical Realtor {Used Car Salesman I believe was the comparison (BTW they have families to feed too)} or I can encourage and educate.

    I grew up in Baytown, the physical location of the largest refining plant in the United States. As such, in the 70’s- 80’s…my parents lost nearly everything in the crash, (clothing stores…or was that because the fabulous San Jacinto Mall opened? Or Walmart?
    Hmmm here’s a headline: American Dream of Small Business Owners Dying with Changing Times (move on)

    While I would like to disagree that the city still runs on oil, I am not ignorant …and stating the obvious is stupid but here goes: This is Houston. Of course the Oil prices will effect EVERY business. When a headline seems to be “fear invoking” and extreme it’s difficult for me not to comment. Especially when that headline is as far as some people will read and then begin to quote it…and the snowball begins to tumble down hill. The fact that you quoted KTRH on their report makes me question the validity of any of your facts. Did they check their facts?? or were they reckless in their report too?

    Thank you for your article I appreciate intelligent discussion,(yes… a woman, realtor, non-commercial no less….GASP!!) and after all this is still the United States of America…where we are supposed to have freedoms…There was some great discussion and some just plain stupidity and ignorance. (Those I choose to ignore…as we all should.)

    FYI: My reality is that the market has slowed from the crazy good business of the Summer months. This is normal. Will it pick up as it normally does in a next cycle…well let me get my crystal ball out….hmmmm. Guess I will have to wait. Have the number of REALTORS increased because the market is hot…of course, will those same agents get discouraged and leave the market as it slows…most likely…Just the way people jump on any band wagon when things are great. As a full-time professional REALTOR the softening is less likely to impact my business, just as the Commercial side is not predicting a huge impact. Families still move from city to city, state to state…in all kinds of markets, however, it’s only the Professionals that will be able to weather the storms. After all, it’s hard to appreciate the good times, if there are never any challenging times, right?

    May God Bless… Houston, Texas, Oil, Gas, hard-working REALTORS trying to make a living (Commercial ones too- see, I’m nice) Used Car Salesman, and yes Lord, bless the Henny-Penny’s of the world.


  • Matthew B

    Too much “doom-and-gloom” scare in this article. Sure, the slowdown in oil is not going to be great for the next couple years, just like a slowdown in tech wouldn’t be good for Austin or a slowdown in Finance wouldn’t be good for Dallas. But the downturn in the 80’s was exasperated by a previous level of overbuilding (commercial & residential) that is nowhere near where we are today. Downstream operations benefit from the low oil prices and the East side of town (think Baytown) is benefiting, companies are still investing billions (literally) in petrochemical facilities nearby, the port is expanding, and you simply cannot ignore the fact that the med-center continues to expand and bring jobs to the city (and will be of growing importance with the changing of healthcare in this country).

    Most importantly- if you look at the big picture, I’d say any city built on the industries of energy, healthcare, and global trade is going to have good prospects for growth over the next 20-50 years.

    So slowdown… yes. Crash… you never know, but I’d say not likely. However- long term prospects? Better than almost any other city out there. Take a look back at this in 20 years and I suspect the only one who “screwed it up” will be the author of the article.

    • Evan Altemus

      This guy is the most intelligent poster in this thread…thank you for looking at the big picture and having sanity. Yes the economy will be impacted somewhat but it’s not this doom and gloom scenario. It would be so much worse if the entire US economy was bad, as well as the stock market being down with high interest rates.

  • Evan Altemus

    Just like anything else, if everyone says it’s going to happen or about to happen, it probably won’t. When people make blanket statements like “Houston real estate is about to crash” then they don’t understand the market. Office buildings are overbuilt in Houston whereas retail is very under built, regardless if some more jobs are lost. I would be concerned about real estate values for Class B and C office in the short term but not retail. Retailers, especially restaurants, are flocking to Houston. Now as for residential, Houston is also very under built. It’s all about supply and demand. I talked to a very prominent national home builder last week who said they are going about business as usual because it takes them at least 2 years to get a project built…he said by then who knows what oil prices will be at, but they can’t sit around then hurry to build once oil prices go up. Let’s look at straight numbers because those aren’t opinions. The medical center area has hired numerous more workers and continues to expand. No doubt E&P companies are struggling now, but petrochemical refinery companies have been booming because of cheap inputs. They are located in SE Houston. In addition, several oil and gas companies have consolidated their operations to Houston from other cities across the US. Even if they layoff people, they still brought more jobs to Houston. Another factor is that the stock market as a whole is still at an all time high, which means people have more cash available if need be. The thing is that Houston overall was very underdeveloped for the longest time. Yes, oil prices are down, but the city has great long-term fundamentals. The fact that the general public is thinking a crash will happen means it probably won’t…how often is the general public right?

  • Evan Altemus

    If you look at hereishouston.com’s largest employers in the Greater Houston Area, 9 out of 12 of the employers are non oil and gas companies…that is a fact, not an opinion. He is also incorrect in regards to medical related jobs, because 5 of those top 12 employers are medical related, including the largest employer in the area, Memorial Hermann…ignorance is bliss though right? Or at least it gets more clicks onto the website? Usually the truth isn’t at one extreme or the other, but somewhere in between.

    • XLK

      Medical is the top employer in many cities as it is a necessity, so what’s your point? You lead to yet another Houston promotional website and miss the entire point of the article – most of the SERVICE jobs are because of the oil boom and connected to the increase from it. The additional employment in the last few years was largely oil & gas at the same time as the real estate run up – connected. Those jobs are being lost now. Common sense. http://hereishouston.com/?q=node/40 And btw, the job creation in refining isn’t remotely close to those being lost upstream – just a blip – and competition for them sends wages down with the oversupply of labor that has been laid off. All the arguments against the author are pure emotional or “I feel” rather than substantiated as was done even further by the journalist in later comments

      • Evan Altemus

        The title of the article didn’t say anything about SERVICE related jobs. It was about Houston’s real estate market. Houston has added well over 1 million people to its population since 2000 and is now the third biggest city in the country. Actually, Dallas’ 3 out of the top 4 employers aren’t medical related, and 15/20 top employers aren’t medical related. With the Panama Canal expansion, the port of Houston has expanded as well. It is predicted that Houston will have a net zero job gain/loss in 2015…not bad for a city supposedly heading for a massive recession. Things that help Houston are no state taxes, the port, major medical hub for the world, refineries adding jobs, and other non oil/gas companies that have relocated here, as well as low interest rates. Yes there will and have been E&P and oil/gas service jobs lost, no doubt, but it’s not going to cause a massive real estate bust across all product types (retail, apartments, office, residential, etc). We are overbuilt for some office and some apartments, under built for retail, and probably still under built for residential.

        • XLK

          Well excuse me, but the article connects the rest of employment to oil & gas. You must be yet another delusional person in real estate that doesn’t want to see the good times end. You have skin in the game. No way current levels are sustainable. And yet again, the author claimed the industries of Houston’s fortune 500 companies not TOP employers – the Fortune 500 are almost all oil & gas. Dallas won’t see the bust because it is diversified – Houston isn’t.

          • XLK

            The article largely connects real estate to employment. Employment is the main driver. Period. Read the article past the title!

          • Evan Altemus

            XLK, you aren’t reading what I’m saying and it doesn’t seem like you know what you’re talking about. If you are a developer who built a non-preleased office tower in Energy Corridor, highly levered, and don’t have deep pockets, then you are probably in trouble. If you have a main and main new retail center in a good area, now is a great time for you because you can lock in low interest rates and have a great asset for the next 20 years. New residential condo towers have sold out very quickly. To just make a blanket statement like real estate is going to crash in Houston is ignorant. There are several types of real estate, like retail, office, apartment, residential, industrial. Some are in much better positions than others right now in Houston…it just depends on where and what you’re talking about. Your comment about the service industry is actually completely wrong as well. Several out of area restaurants have and continue to move here, including new high end retailers coming to developments/projects in the Galleria and River Oaks. Some real estate will have problems, some are in-between, and some projects/properties will do even better.

  • James DeLeon

    Yes, anyone with $$ to make in real estate will tell you there is no downturn and attack the author who says so. If that’s the case, why is there so much unoccupied real estate in midtown now? And for rent signs in yards that haven’t been seen since 2008?

    I’m glad the Greater Houston Partnership cares about luxury apartment-overbuilding. Too bad they don’t care as much about the kids in HISD upon whom they foisted the worst superintendent in HISD’s history.

    How’s that bond program going for you, Greater Houston…? Think your member contractors will get rich from another bond?

    The GHP had a secret meeting with Grier in 2009 before he was hired. Do us all a favor and sit out these upcoming elections. You’ll be happy when test scores finally start climbing up.


    • Evan Altemus

      Because several people bought properties inside the loop to rent, even though some of them really aren’t good rental properties because they are too expensive. Saw one couple buy a $500k townhome to rent, then it took them 3 months to rent because most people who would pay that much can afford to buy their own place. It’s not about people in real estate saying there’s no downturn. It depends on the product type and location. What people should be talking more about are interest rates instead of oil……in my opinion the real estate market now depends much more on what happens to interest rates because that impacts how much people/investors can pay for residential/commercial.

      • Kelly Kline

        First you say there is no downturn. Now you’re agreeing that there is a downturn. You’re contradicting yourself. On interest rates, the Fed will raise it by the end of the year. More pain for the real estate industry here in Houston – prepare for a crash. Not being able to rent out a townhome for over 3 months would tell you something. A lot of people who choose to ignore these warning signs are just gonna be like deer caught in headlights.

        • Evan Altemus

          Ok, take a deep breath. I know it might blow your mind to think about this, but it’s possible for values of let’s say office buildings to go down and let’s say industrial properties to go up in the same city, shocking I know. If you build a lot of one thing and not a lot of another, then that’s likely to happen. In addition, commercial properties are based on the rents they can get, not the case with residential single family homes where people (users) live in them. Houston is really under built with homes. One reason why the entire real estate market across the country crashed around 2008 is because lenders completely stopped lending…that means much less buyers (supply and demand).

          Also, that townhome example that you are so fired up about happened like 16 months ago in June 2014. If you think that example from June 2014 is a clear example that let’s say industrial real estate is about to crash in Houston then maybe I need to check your crystal ball. It tells me that you shouldn’t buy a $500k townhome and expect it to be easy to rent out because people who typically can pay $3000+ per month for rent probably want to buy something. (once again supply/demand). The demand for $3000 townhome rental homes is very low. It tells me that they didn’t know what they are doing with real estate and made a stupid “investment purchase”. Kind of like people who make blanket statements about real estate but have no clue what they are talking about.

          • Kelly Kline

            I’m referring to residential property, specifically townhomes. I agree that commercial real estate does not seem to be affected. However, if you look at Midtown, I’m seeing too many new apartment buildings and townhomes being built while more and more existing townhomes being listed for sale. The asking price is still frothy – $160 – $260 per sqft. The sellers who bought 4 years before are still making a windfall – property bought in the low $300s are selling at the high $500s. There seems to be a disconnect between what sellers think the market should be and reality. Builders are also building as if oil price is at $120 a barrel. Well guess what folks, oil will never recover to that level not even in the next decade so more layoffs are in store for Houston. Add higher interest rates to the mix and what we have is a perfect storm for the residential real estate market.

  • M.J. Michaels

    My wife and I are from Southern California and have been looking at homes for sale in Houston for the last 30 days. We have now stopped looking and decided to wait at least a year before buying. It is our opinion that the market has already started to crash for a multitude of reasons that I don’t care to debate.

  • yuping sun

    I see some house listed on market stays on. During summer 2015, I saw house sold in the 1st week of listing. A lot of people forgot one oil and gas job brings a number of other jobs. In another word, one job created in oil and gas will help creating say 4 other jobs to support the one oil and gas job in Houston. Now we are losing oil and gas jobs and the associated jobs will also vanish soon, but not at the same time. Oil and gas is main industry in Houston. No one knows the price of oil and gas. We only can speculate why oil price is down and why Saudi can keep the production of oil at low price. Some thinks we are at war with Putin using oil as weapon. If this is true, the oil will remain low as long as Putin is supporting Ukraine and his ally in the middle east. Look at oil and gas as business expense of American non-energy economy, then the net effects for USA economy should be positive. Overall, USA will prosper if oil and gas price remains under 30. God give us one more boom after the 80’s crash so we should be happy no matter what.

  • Pryorok

    According to Wells Fargo, Houston officially entered a recession at the end of October 2015. https://www08.wellsfargomedia.com/assets/pdf/commercial/insights/economics/real-estate-and-housing/housing-wrapup-20151030.pdf

  • Brick Wall

    In the 80’s the price of oil crashed to about $10/bbl. That equates to a current-day price of around, you guessed it, $40/bbl. From this macro stand-point one would assume that H-town is headed for another ’80’s style crash. But there are mitigating factors.
    First, there is a more diversified economy in Houston. More hospitals, more retail, more service-related, more of everything.
    Second, the instant information age now allows for more rapid adjustments to a changing industry and economy. Back in the 80’s nobody knew what the global, real-time production/demand/storage figures actually looked like. Information from the Mid-East, FSU, Asia was very limited. Consequently predictions of the severity of the crash were flawed, and delayed…until the tipping point was reached. And then when the economy did turn, it went off a cliff. These days the economy adjusts virtually every-day to new information and data. So the down-trend should be more gradual. So far, it certainly has been.
    Finally, a lot of the folks getting laid off in the industry this time around are nearing, or are already at, retirement age. Kids are out of the house, the house is mostly paid for, and many are already prepared, or nearly prepared to get by on their savings, 401K’s, pensions, social security, etc. That wasn’t the case back in the 80’s. There was a huge amount of young talent brought into the industry from ’77 – ’82. Most of us were just out of college, had little in the way of savings, and had 30-yr loans staring us in the face. We had no cushion. So when we lost our job, there was nothing to fall back on and we had to turn the house back to the bank.
    Not sayin that there won’t be a down-turn. But because of a more diverse economy, an older and more financially stable oil workforce, and a more nimble, real-time data driven industry I expect the downturn will occur much more gradually. And so far, this is exactly what has been happening.

  • Kelly Kline

    I have been monitoring home prices and they are still ridiculously high. The real estate market in Houston is in a bubble, no doubt about it. This is in a way encouraged by the City of Houston as they see property tax revenue as a way to bring the city out of the pension debt mess they’re in. So if you’re buying a home right now, remember that you’re paying the price (in taxes) for the city’s mismanagement of funds.

  • Chris Purcell

    John Nova Lomax, is right on I was here when all the banks & S&L’S went bust. Unless you lived in specific locations inside the loop or memorial property values plummeted 30-70%. I know I purchased 2,500 sq. ft. homes for .50 cent on the dollar In just two years with oil revenues down the city is over 3 billion in debt just on pensions.

    When 30% now used to be 40% of your economic engine is not making money and laying off so far 20% and will get deeper by the end of next year. Don’t believe the blood sucking realtors & the diverse economy theory. If the city & area is not receiving income from taxes on 30% of the economy it’s a disaster. Home prices were already inflated at least 20% Cat’s out of the bag be smart