Future Downturn Expected for Houston Housing Market

http://www.cnbc.com/id/102424293

"Houston housing awaits spring chill"

Growing up in the Houston area, I have developed a great interest in the city and have become more aware of the growth and development of the area.  A few weeks ago, I came across this article from CNBC.com that examined the housing market in the city and the expected impact from recently low oil prices.

Houston is a strong, energy-focused economy with many large O&G firms establishing their headquarters in the metropolitan area.  That being said, as the energy industry goes, so does the city's economy. As these energy companies thrive, more jobs are created which leads to expansion and growth around the city limits.  As corporations such as Halliburton, Baker Hughes, Weatherford and Conoco Phillips experience corporate layoffs, the desirable and "frothy" real estate market is expected to face an eventual cooling-off period.

However, according to historical analysis, economic standstills such as the energy struggle we see facing Houston today don't effect the real estate market as quickly.  A real estate agent in the Houston area said, "Now that oil prices are down, things haven't completely changed, but let's just say that they have come to more of a stall".  Evidence has shown that the largest drops in year-over-year oil prices haven't had an effect on housing markets until much later. Statistics show home prices don't tend to slide until roughly 18 months to 2 years after the city experiences job losses.

After already experiencing drops in sales of town homes and condominiums, experts believe that a cool-down on the residential side is next.  Rick Sharga, executive vice president of of Auction.com, says it's only a matter of time until the housing market feels the effects.  "Because it hasn't been hit yet doesn't mean it's not going to happen, so I think patience is the buzz word. We're expecting that Houston will cool down significantly on the residential side".

I found this article to be interesting to me as it pertains to my future career plans and my parents' retirement plans.  Upon finishing graduate school and preparing to begin my career, I am very interested in working in either the Dallas or Houston area.  I'm hoping that my knowledge and experience gained in the MRE Program will allow me to make wise decisions in the real estate market.  It will be interesting to see how the market responds once oil prices start to rise again, and whether or not the market will be frothy again by the time I am a potential home buyer.  Buy low, sell high is the idea here.  Ideally, property values will be relatively low when I am looking to buy and will appreciate quickly as the housing market begins to recover and grow at rates seen previous to the oil slides.

As for my parents, they are looking to retire very soon and are considering many different options as they look for their future home.  They've looked at high-rise condominiums in the downtown area, smaller homes in high-population suburbs inside the 610 loop and even multiple acre lots in exurbia Houston.  I think the recent drop in oil, and the subsequent impact on major firms in the city resulting in job losses, will eventually make a difference in their financial decision once they decide they're ready to quit working for good.