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Updated about 9 years ago on . Most recent reply

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Cal C.
  • Investor
  • Peachtree Corners, GA
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6 oil states had record home prices in November. Can it last?

Cal C.
  • Investor
  • Peachtree Corners, GA
Posted

No.  It might for a short time, but oil has fallen from $115 to $49, companies are already cutting back on projected production spending.  They will cut back more unless oil suddenly rallies.  In four of these states, Wyoming, South Dakota, Oklahoma, and North Dakota the  increase in home prices over the last few years has been largely due to vastly increased oil exploration and production.  It can be argued, that Colorado and Texas are diversified enough to withstand a prolonged drop in oil prices, but I believe they'll still be affected heavily by it, especially in oil rich areas.  

Core Logic Report on home prices NOV 2014

Note this is only showing the states where peaks occurred, you have to register to get the report.  Marketwatch has more.  Crashing oil prices to hit house price appreciation

This may take a while to filter down, but at some point soon the strong price appreciation that has been going on in oil rich states will almost certainly halt. The question is will they stay flat or decline?  

The last bet I would be making right now is on continued strong price appreciation in oil rich areas. 

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Bill S.
  • Rental Property Investor
  • Denver, CO
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Bill S.
  • Rental Property Investor
  • Denver, CO
ModeratorReplied

@Cal C. there is nothing new under the sun. What goes up must come down. Wyoming, I know, has been through more than one energy boom and subsequent bust. This one is not the first nor the last. Make hay while the sun shines and watch the clouds on the horizon.

  • Bill S.
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