Contrary to what the Fed and many others will tell you about the economy and the containment of the oil collapse to specific industries, the housing market is being crushed in oil rich towns like Houston.
Just browsing through the for sale notices on realtor.com, it’s easy to see the pain.
Prices for homes valued over 500k, just in the month of January, plunged by 9%.
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.”
City-wide data also show that while overall sales of single family homes fell 2 percent in January, sales of those priced over $500,000 tumbled 9 percent. The overall median house price was $200,000, up 5 percent on the year, according to the realtors’ association.
In a nod to the downturn, Ouisie’s Table, a River Oaks institution, is now offering its “Oil Barrel Bargain,” a three course dinner for the price of a barrel of oil, now around $30.
This is called contagion. The wealth created in the Houston oil economy is being destroyed. As time passes, homes will be foreclosed and banks will be forced to take write downs.
I seriously doubt the Texas economy is as diversified as so many bank execs from Texas like to say. I suppose we’ll see about that shortly.
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They say “Don’t mess with Texas.”
Well, Saudi Arabia is messing with Texas on a grande scale.
So I guess the phrase should be “Please don’t mess with Texas.”
Family friend just bought a home in FL for 750k that was listed for 1M.
That RH post you made yesterday signaled “a further pullback by the high-end consumer” during “January, which is historically our biggest month of the quarter for furniture sales.” I work as a consultant to the building product industry and we track the various product markets by price point tier – weakness in the luxury consumer is not a good sign moving forward.
someone pray tell me what’s the game plan of the Saudis
what happens when US oil producers go bust and pack up shop? what’s going to stop them from jacking up the price for their sweet sweet crude to say $300 a barrel
Hopefully Huston turns post-apocalyptic like Detroit because desolate ruins are all the rage in the nouveau riche scene.
cycles come and go but Kuroda is forever
http://www.bloomberg.com/news/articles/2015-03-16/saudi-arabia-will-need-more-oil-to-feed-local-refinery-expansion
As you can plainly see, Saudi Arabia is engaged in a conspiracy of egregious proportions.
http://tinyurl.com/pmnsatd
Grew up there. River Oaks is full of a bunch of entitled assholes.
Reduced by 549K LOL WHAT