Oil’s Impact On Real Estate: Review Of Houston’s Home & Land Values Since Energy Downturn

The Shocking Truth: What WAS The Impact Of The Oil Price Collapse on Houston’s Housing Market?

Oil Price Impact On Specific Houston Neighborhoods

Two years ago, when oil prices fell by half, a number of pundits predicted that the Houston real estate market would be in for a massive fall, and new buyers would be in for “great deals.”

We studied both home prices and land prices of 52 Top Ranked Houston Neighborhood (“Where Can I Afford To Live On My Salary”) to see what actually happened, and where you can find the best values now.

HOME PRICES: Notable Highlights

  • 2016 set new records for 21 neighborhoods (40% of total).
  • 2015 was the high water mark for 28 areas (54% of total).
    • On average, 2016 home values are down by 3% in these areas.
  • 2014 or earlier set the record for 3 areas (6% of total).
    • On average, 2016 home values are down by 10% in these areas.

LAND PRICES: Notable Highlights

  • 2016 set new records 23% of the time.
  • 2015 was the high water mark for 32% of the neighborhoods.
  • 2014 or earlier set the record 45% of the time.
  • For neighborhoods that are down from prior highs, the median drop in land price is 13%.

“Paige Martin is the best Realtor. She is highly experienced and very knowledgeable. She made our buying experience an enjoyable one, not only for us, but for our daughter, son-in-law and several of our friends. We have bought and sold many houses, and Paige has been the best realtor we have ever worked with. We highly recommend her.”

Jeremy & Lynn Greene

Some of the worst values now are new construction. Many builders bought land prices at the peak in 2014 or 2015 and also had higher labor and materials cost. As such, there’s a lot of overpriced (some with major quality issues) new construction inventory sitting around.

Key Takeaways

  • Houston is still growing and actually added 50,000 jobs in the last year. Gains in healthcare, government, retail & accommodations overcame job losses from energy and manufacturing.(1)
  • The price of crude has more than doubled from its February trough. The North American drilling fleet has added more than 150 rigs over the past five months. Bellwether companies, like Halliburton and Schlumberger, also reported profits in the most recent quarter.(2)
  • In a number of areas, prices have moved up in the last 30-60 days and inventory has fallen.
  • Home values in Top Ranked Neighborhoods located near major job centers (Downtown, Galleria, Medical Center) have done well on a 1, 5 and 10 year basis.
  • Some of the worst values in the market are from new construction homes. Many builders bought high land prices in 2014 and 2015 and experienced high labor and materials cost (see why). As such, many are either not being realistic on their current list prices (and their inventory is sitting) or their quality of construction is suffering.
  • Some of the best values in the market are older homes with larger lots in premier neighborhoods. There’s less buyer competition from builders, land values fell further than home prices, and (based on the 10 year sales trend) will likely will rebound faster.

Get "Impact Of Oil On Houston Neighborhoods" Guide In PDF

Get the entire 52-neighborhood Pricing Guide in an easy-to-read Adobe Acrobat format. Save to your desktop or read on your mobile.

RECORD YEARS OF HOUSTON’S BEST NEIGHBORHOODS

Summary – Record Homes Prices So Far

Inner Loop AreasAreas Outside The Loop
2016Greater Heights, Highland Village, Museum District, Royden / Afton Oaks, RiversideBriargrove Park, Champions, Clear Lake, Copperfield, Cypress, Friendswood, Fall Creek, Garden Oaks, Jersey Village, Kingwood, League City, Missouri City, Northwest Houston, Pearland, Sienna, Spring / Klein
2015
(Down 3% on avg)
Bellaire, Braeswood, Cottage Grove, Downtown, EaDo, Timbergrove, Medical Center, Memorial Park, Midtown, Montrose, Rice Military, River Oaks, Washington / Sabine, West UniversityBriargrove, Energy Corridor, Katy, Knollwood, Galleria, Memorial Villages, Memorial, Memorial West, Meyerland, Oak Forest, Spring Branch, Sugar Land, Tanglewood, Woodlands
2014 Or Prior
(Down 10% on avg)
River Oaks Shopping AreaEldridge North, Royal Oaks

Summary – Record Land Prices So Far

HOUSTON ECONOMY AT A GLANCE

The Energy Downturn Slowed Down Growth in Houston…

Houston Unemployment Rate Versus Texas and the US

US Rig Count Bouncing Back

The energy downturn has slowed down growth in Houston. The good news is the price of crude has more than doubled from its February trough.

The North American drilling fleet has added more than 150 rigs over the past five months. Bellwether companies, like Halliburton and Schlumberger, reported profits―albeit small ones―in the third quarter.

… However Economic Diversity Helped Absorb Job Losses Ending To A Net Gain In Employment

Houston Job Gains Versus Losses

Healthcare (9,000 jobs), Construction (7,000), Government (5,000), Accommodation & Food Services (5,000), Retail (5,000) industries made up the bulk of the nearly 50,000 jobs created the past year.

This more than offsets the jobs lost in Wholesale (2,000), Manufacturing (9,000), and Energy (9,000).

Overall, the diversity of Houston’s economy helped avoid a repeat of the downturns in the past.

As outlined in the graph below, the difference between the 2007/2008 financial crisis financial crises to the oil price drop two years ago is vast. In 2009 (just one year after markets crashed), the job growth plunged to -110.6. This year, we still netted a positive growth.

Houston 25 Year Employment Index

While the stabilizing oil industry also helps, the growth in various Houston industries like Health, Construction and Retail keeps future projections rosy.

Houston Jobs 10 Year Projection

Houston’s Living Costs and Housing Costs Continue To Be Marginally Lower Than US Metros

Cost Of Living Comparisons

Where Houston Economy Stands and Where It’s Projected To Go


Source: Houston.ORG

HOME PRICES OF TOP HOUSTON NEIGHBORHOODS

HOME PRICE RECORD YEARS OF POPULAR HOUSTON NEIGHBORHOODS

Houston Neighborhood
Eldridge North
Royal Oaks
River Oaks Shopping Area
Memorial Villages
Montrose
River Oaks
Downtown
Oak Forest
Memorial Park
Rice Military
Memorial West
Meyerland
Memorial Close In
West University
Washington East / Sabine
Galleria
Briargrove
The Woodlands
Braeswood Place
Knollwood / Woodside
EaDo
Cottage Grove
Katy
Sugar Land
Bellaire
Energy Corridor
Spring Branch
Medical Center
Midtown
Timbergrove / Lazybrook
Tanglewood
Rice / Museum District
Highland Village / Midlane
Royden / Afton Oaks
Garden Oaks
Heights / Greater Heights
Briargrove Park / Walnutbend
University / Riverside
Sienna Area
Friendswood
League City
Pearland
Clear Lake
Fall Creek
Cypress
Kingwood
Jersey Village
Spring / Klein
Northwest Houston
Copperfield Area
Champions Area
Missouri City Area
2016 Median Sold Home Price / Sq Ft
$94
$179
$233
$327
$230
$445
$210
$196
$337
$195
$236
$177
$356
$350
$182
$216
$293
$131
$273
$211
$167
$176
$107
$117
$261
$140
$156
$164
$191
$234
$350
$322
$306
$305
$252
$233
$188
$137
$114
$108
$104
$103
$102
$100
$99
$98
$98
$94
$90
$89
$88
$88
Annual Highest Recorded Median Sold Price / Sq Ft
$107
$203
$250
$359
$250
$478
$224
$208
$356
$205
$246
$184
$369
$362
$188
$223
$302
$135
$281
$217
$171
$180
$108
$118
$263
$141
$157
$165
$192
$235
$351
$322
$306
$305
$252
$233
$188
$137
$114
$108
$104
$103
$102
$100
$99
$98
$98
$94
$90
$89
$88
$88
Year With The Record
2012
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
% From Highest
-12%
-12%
-7%
-9%
-8%
-7%
-6%
-6%
-5%
-5%
-4%
-4%
-4%
-3%
-3%
-3%
-3%
-3%
-3%
-3%
-2%
-2%
-1%
-1%
-1%
-1%
-1%
-1%
-1%
0%
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

LAND PRICES OF TOP HOUSTON NEIGHBORHOODS

LAND PRICE RECORD YEARS OF POPULAR HOUSTON NEIGHBORHOODS

Houston Neighborhood
Northwest Houston
Champions Area
Copperfield Area
Energy Corridor
Clear Lake
Sienna Area
Pearland
Missouri City Area
Royal Oaks
Royden / Afton Oaks
River Oaks
University / Riverside
Briargrove Park / Walnutbend
Meyerland
Tanglewood
Washington East / Sabine
Oak Forest
Braeswood Place
Bellaire
Katy
Galleria
Friendswood
EaDo
Timbergrove / Lazybrook
Garden Oaks
Highland Village / Midlane
River Oaks Shopping Area
Memorial Close In
Montrose
Memorial West
Heights / Greater Heights
Rice / Museum District
West University
Briargrove
Cottage Grove
Knollwood / Woodside
Memorial Villages
Memorial Park
Rice Military
The Woodlands
Sugar Land
Midtown
Spring Branch
Medical Center
Cypress
League City
Kingwood
2016 Median Sold Lot Price / Sq Ft
$3
$18
$25
$14
$9
$1
$7
$10
$33
$58
$102
$21
$26
$32
$66
$42
$33
$60
$50
$7
$56
$4
$25
$38
$27
$69
$90
$54
$82
$47
$52
$84
$115
$70
$51
$39
$53
$105
$67
$28
$34
$46
$33
$31
$37
$26
$6
Highest Recorded Median Sold Lot Price / Sq Ft
$6
$22
$28
$30
$19
$4
$10
$14
$36
$87
$131
$26
$32
$39
$77
$47
$37
$67
$53
$7
$57
$5
$31
$47
$33
$81
$104
$62
$90
$51
$56
$89
$121
$73
$53
$40
$53
$105
$67
$28
$34
$46
$33
$31
$37
$26
$6
Year With The Record
2009
2010
2010
2011
2011
2012
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
% From Highest
-46%
-20%
-11%
-53%
-53%
-63%
-31%
-29%
-8%
-33%
-22%
-19%
-19%
-18%
-14%
-11%
-11%
-10%
-6%
-5%
-2%
-21%
-19%
-19%
-18%
-15%
-13%
-13%
-9%
-8%
-7%
-6%
-5%
-4%
-4%
-3%
 
 
 
 
 
 
 
 
 
 
 

More About Paige MartinTop Realtor In Houston

As featured on Fox News in the Morning, Houston Business Journal, and Houston Chronicle, Paige Martin, a consistent Top Producing Broker-Associate and head of the Houston Properties Team, is ranked amongst the top Keller Williams agents in the United States.

Paige Martin is ranked as one of the top residential real estate agents in the world.

A Houston-area native, Paige is an experienced, successful partner in any residential real estate transaction. Armed with a local perspective of the city & a deep knowledge of Houston real estate market, her skills have marked her as one of the most sought-after agents in Houston.

Upon graduation from Baylor University, Paige launched a career as a marketing consultant, developing customized marketing plans and strategies for her clients. She now uses those professional marketing skills to help her real estate clients find and sell their homes.

When working with home sellers, Paige employs individually-tailored, cutting-edge techniques to gain her clients the most value in the shortest time.

She is also an ideal partner for buyers, helping them make informed home-buying decisions with the least amount of stress.

Paige is passionate about her work, her clients and her city. Her attention to detail and excellent communication skills make her the perfect choice for those looking to buy or sell a home in Houston.

In addition to her robust real estate career, Paige was appointed by Houston’s Mayor Bill White to serve on the Board of Directors for the Downtown Redevelopment Authority and Tax Increment Reinvestment Zone #3 (TIRZ), where she volunteers her time as a Chairman of the Housing Committee, as well as a member the Budget & Finance Committee. Paige also serves a variety of non-profits, civic and community boards and has been recognized for fundraising by the Houston Police Foundation.

A member of the National Association of Realtors, Texas Association of Realtors and Houston Association of Realtors, Paige has served on the Houston Association of Realtors MLS Advisory Group, in which she volunteers on the TEMPO Task Force and the CMA Task Force. Paige is also the co-chair of the Keller Williams Realty – Memorial Office’s Luxury Homes Committee.

Paige Martin is a customer-focused Houston Realtor’ (member of the National Association of Realtors) dedicated to providing exceptional service. Paige and her team guides clients through all aspects of learning about Houston, relocating to Houston, buying a home, buying a highrise or condo, tips for selling your home and ensuring that your transaction goes as seamlessly as possible.

Email Paige at Paige@HoustonProperties.com or call 713-384-5177 today for personalized service.

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