An Incorrect Assumption
Bloomberg reports on Texas. “Welcome to Dallas in 2015, a city whose bustling economy is attracting new residents at a rapid pace—and making it increasingly difficult to buy a house. New listings get multiple offers in mere days, said Steve Habgood, president of the MetroTex Association of Realtors. ‘People are saying, ‘Great, I can get a premium on the price I paid, but where am I going to live once I sell?’ said Habgood. ‘The options are pretty limited.’”
“Last year, Rick Smith put his family’s house in suburban Dallas on the market, hoping to find a new home close to better schools and the city’s downtown. Selling the old house was a snap; buying a new one wasn’t. In January the family moved to a town home in a rental community, and quickly found they weren’t the only family forced into renting. ‘If you drive around our community, you’ll see moving boxes stacked up in the garages,’ he said. ‘No one wants to unpack, because they think they’ll be moving again soon.’”
The Waco Tribune. “To say the local housing market is sizzling might be understating the matter. Home sales in the Waco area jumped 20 percent during the first two months compared with 2014; local real estate agents say they are seeing deals struck in a week or less on homes placed on the market. Kathy Schroeder, vice president of residential services at Coldwell Banker Jim Stewart Realtors said HGTV’s popular ‘Fixer Upper’ program has people from around the country inquiring about the availability of properties locally. Not all inquiries can be taken seriously, she said, but they show that Waco’s story is getting out.”
“The website Realtor.com, in a report that appeared March 6, listed Waco No. 1 under the headline: ‘Just in Time for Spring, These 20 Markets are Heating Up.’ Whatever the reasons, people are buying and selling homes locally at a pace that has real estate agents smiling. ‘I’m seeing people from Temple and Austin making trips up here to buy property,’ said Trammell Kelly, a residential sales specialist at Kelly Realtors.”
“Roman Novian, an agent with Coldwell Banker Jim Stewart Realtors, said he has sold 20 homes so far this year. He made two observations about the Waco market: It is attracting homebuyers from California and there is a shortage of homes available in the $150,000 to $200,000 range. ‘When inventory is low, that creates a seller’s market,’ Novian said.”
The Houston Chronicle. “The humming in Houston’s economy continues to soften, and economists say it’s likely to grow quieter still. ‘We’re all on edge as we’re watching oil prices decline,’ said Jesse Thompson, business economist for the Houston Branch of the Federal Reserve Bank of Dallas, adding he expects to see more of a spillover to manufacturing, legal services, financial services and real estate.”
“‘Our phone is not ringing as frequently as it was a year ago,’ lamented Tom Simmons, global energy practice leader for the executive search firm Spencer Stuart in Houston. Already, Simmons reports he is seeing more unsolicited résumés from veteran managers in the energy business, those with 20 to 30 years of experience. They haven’t had to look for work for years, he said. ‘I haven’t seen these types of résumés for quite a long time,’ he said. Simmons also is getting unsolicited résumés from investment bankers with three to five years of experience who specialize in energy exploration and production.”
“Boyd Nash-Stacey, senior economist at BBVA Compass in Houston, said he is seeing weaknesses in places he wasn’t expecting just a few months ago. Oil and manufacturing problems also seem to be affecting demand for housing. Nash-Stacey reported that construction specialists such as plumbers and electricians cut 4,000 jobs in February. People are reluctant to buy houses because they’ve lost jobs or they’re worried about job security, he said.”
From Reuters. “Sales tax receipts in the thriving oil town of Midland, Texas, fell this month, only the second decline in five years and one of the first signs of how low oil prices are beginning to ripple beyond oil company bottom lines and into the wider economy. The city’s overheated housing market has also shown signs of easing. The 514 unsold houses on the market in Midland County in January was most in years, according to county statistics. The average sale price fell 20 percent from June to January. Foreclosures starts jumped 193 percent from 40 in 2013 to 117 in 2014, with most of that growth occurring in the second half of the year, according to Realty Trac.”
“‘The most visible sign of cracks in the armor of the Midland housing market is the rise in foreclosure starts in 2014,’ said Realty Trac VP Daren Blomquist.”
“It is anyone’s guess how long oil prices will remain depressed. Some say it could be months, even years, before oil producing regions recover from low oil prices. ‘There is an incorrect assumption that we are further into this than we already are,’ said Karr Ingham, an economist who compiles the Texas PetroIndex, an annual analysis of the state’s energy economy. ‘We have a long way to go.’”
The Midland Reporter Telegram. “Apartment rates started falling in February after a large increase in the second half of 2014, according to data provided by ApartmentList. The data shows that median rents for one-bedroom apartments in Midland increased monthly by at least 7.8 percent year-over-year for the months of July 2014 through January 2015 before an 8.3 percent drop in February. Apartment complex vacancies is due to oil companies ‘trimming the fat,’ according to Alex Garcia, area director for Weidner Apartment Homes. Garcia has seen the rental market react to the shift in the local labor market. ‘We’ve done things like renegotiated contracts in the middle,’ he said.”
“‘They (the oil companies) grew so fast, so quickly, and needed bodies, and they hired anybody,’ Garcia said. ‘If you breathed, you went up to work with them. Criminal record didn’t matter, horrible credit didn’t matter, work ethic didn’t matter. Now is the time when they’re cutting 20 percent of their people who were those people.’”
“One of the groups that may be in the biggest trouble will be investors who have poured money into new complexes that either were just completed or are still under construction, he said. Garcia believes that high market rates drove that investment because investors could make their money back quickly. But he said that while the current level of apartment units in Midland may be sustainable, if more complexes are pushed forward that the city could start having issues.”
