It’s no secret that Texas is the country’s leader in the oil and gas game. Our state is the driving force behind America’s energy industry, producing around 40 percent of the United States’ crude oil. When oil prices are up, this is obviously a wonderful thing for the state. But, when oil prices plummet, it leads to massive job losses and economic heartache. Right now, with oil prices below $50 a barrel, we fall into the latter of those two categories. Job growth and the state of the economy are very closely tied to the health of the real estate market. Because of this, as 2015 began, many believed that the Texas housing market was headed for serious trouble.

A CNN Money article from January is one of numerous examples illustrating the concern that was placed on the Texas housing market at the beginning of the year. It credits the healthy housing market of the past few years largely to the booming energy industry. Thus, the expectation was that, with the energy industry faltering, the housing market would falter too. The 1980 oil crash was referenced as a potential indicator of what would happen this time around. When oil prices dropped 50 percent in the 1980s, Texas home prices dropped 14 percent. Houston, in particular, saw housing permits drop 75 percent. The assumption was that we may see a repeat of that.

As I wrote a few months ago though, Houston’s economy is no longer overly reliant on oil like it was in the 1980s. The city’s economic diversity is such that it can now withstand falling oil prices. Houston’s housing market has reflected this. Where housing permits plummeted in the 1980s, the  Houston Chronicle reports that, based on sales volume, in 2015, Houston will be one of the largest new homebuilding markets in the United States. Houston is on pace to start about 28,000 homes this year. That is down about 10 percent from 2014, but weather is to blame for part of that. Houston has had one of its wettest years on record and that has made finishing houses and starting new developments much more difficult. Still, the 10 percent drop is a far cry from the collapse seen in the 1980s.

The Texas housing market as a whole also seems determined not to have a repeat of the 1980s. To nearly everyone’s surprise, it is actually thriving. According to the Texas Association of Realtors, despite low oil prices, the Texas housing market is doing very well. “Texas home sales are actually stronger than they were this time last year, when oil prices were nearly $100 a barrel,” said Scott Kesner, chairman of the Texas Association of REALTORS®. “This is further evidence of the strong and enduring demand for Texas real estate.” Single family homes sold in the second quarter of 2015 were up 4.7 percent from the second quarter of 2014. Median home prices for the quarter were up 8.1 percent year-over-year. The earlier concern for the Texas housing market may have been warranted, but so far it is proving to be wrong.

Looking to buy or sell a home, or just have questions about the market? Always feel free to contact me at 713.829.3052 or cynthia@cynthiamullins.com.

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