The hot topic in local real estate is what low oil prices will do to our market.
A lot of people have pontificated on this. The image below came from an article in HAR Connect. It shows what some very knowledgeable people say.
My thoughts lie in proper phrasing of the question: What is the drop in oil price and subsequent job loss going to do to our overheated real estate market? Yes, it is going to affect us, but in a good way. Our local market for the last 2 years has been irrational. We have never had a period where inventory and days on market have been so low. The huge influx of people (150,000 arrivals) last year put a huge strain on home prices and rental prices. If you wanted to buy a house, you jumped on it early and bid high. Some homes sold for more than appraised value and the buyer made up for it. It was not a fun time to be a buyer. It was just crazy!
I heard a local news channel announce “Big Drop in Home Prices Expected with Low Oil Price!” The “big drop” turned out to be an expected 5% price rise instead of 10% price rise. It’s like the “draconian budget cuts” conservatives want…making a slight cut in projected government growth…horrors!
Don’t just read the headline…read the content.
The truth is, we will still have job growth (half of last year’s, but still 65-75000 new jobs); prices will still rise (hopefully very little though); inventories and days on market will rise.
Even if the market slows down tremendously, it will just put us back to normal. Normal days on market is ~90 days, not the current 30 days. Normal inventory of homes is 5-6 months, not 1 to 2 months.
Builders are still having a hard time finding lots to build on, or run-down homes to remodel. This will help keep prices firm too.
So, I look forward to the return to normalcy. Buyers won’t be worrying “am I paying too much?”, or sitting out the market because it is too stressful to chase houses and make ridiculous offers.
The oil people are still buying. The Exxon/Mobil campus is going strong. Not all of these new people want to live in the sterile Woodlands. They are buying in the Heights and areas like Oak Forest, Garden Oaks. We will continue to do well.
Rentals: This is one area where help is on the way. Rental prices have jumped tremendously in the last two years, and inventory has dropped. There are a LOT of high end apartments being built and coming on the market. Some of these are offering one month free rent…that means they are worried about the units not renting quickly. This soft rental market will filter down to all price ranges. You should have better prices and more selection.
Note: this is just the voice of a Heights Realtor, Rich Martin. I’m not hyping you to buy or sell, just to give some local perspective. It will be a good year.