The oil crash has hit Houston, Texas so hard that virtually nobody wants to buy a house there anymore.
A report from Wall Street Journal on Monday examined how sellers are cutting home prices to make them more attractive to now-scarce buyers.
This is happening as housing affordability remains a huge issue in several other metro areas, with the hottest markets like New York and San Francisco seeing home prices going through the roof.
But few states have been hit by the oil crash quite like Texas.
The monthly survey of business owners conducted by the Dallas Fed has for several months chronicled how even businesses not directly linked to the oil industry are buckling under the price crash.
The Wall Street Journal notes that Texas’ economy is obviously more than just oil and gas, and the state has tried to diversify. But the most expensive houses for people with the strongest spending power aren’t attracting many willing buyers.
One analyst estimates that it will take up to four years to clear the supply of houses priced at $400,000 and above in Houston, according to the Journal.
And while the price of homes in the Houston area is still increasing according to the latest data from the FHFA, the appreciation has been at a declining pace throughout 2015.
And things have gotten so bad that there’s literally a ghost town near the epicentre of the oil-price crash.
From The Journal:
“Few neighbourhoods illustrate Houston’s slowdown as dramatically as the communities that sprouted since 2011 around the site of Exxon Mobil Corp.‘s 385-acre campus just north of Houston. Roughly 10,000 workers, most already living in Houston, moved to the campus as it opened in phases in 2014 and 2015. Developers readied thousands of lots for upscale houses in anticipation of a flood of oil executives moving to the area.
Now, unsold homes sit near the Exxon Mobil campus, with the supply of so-called speculative houses there exceeding the metropolitan area’s average since the second quarter of 2014, according to housing market researcher Metrostudy, part of Hanley Wood LLC.”