Midland, TX NOT dropping???

[Nate Barbee]

I've been working in West Texas for 3 years now. The price of oil drives the entire economy. Yet, with thousands upon thousands of oil workers getting laid off, the housing market remains sky high. Homeowners are just allowing themselves to get foreclosed on because even if they broke even on the sell, they wouldn't have enough cash to settle the closing costs. Volume of home sales are very low, inventory is high, but the prices have not decreased. I would think there would have to be some type of correlation between commodity prices and the housing market in an economy so reliant upon oil. Midland home prices are higher in 2016 during an oil crash, than in 2012-2014 during the boom. Am I missing something here? Are banks using a different foreclosure strategy to not shock the market into a downturn? Or will it just take longer for nature to take it's course? Or maybe this shows the real estate market on a macro level is on a bubble.

[Greg H.]

A downward market following a boom period tends to have a huge lag .  Lower prices and an increase in foreclosures will come at some point. Keep in mind it tend to take an institutional lender a minimum of 6-12 months before they foreclosure on a property along with an addional several months to return it to the market

I would not put to much stock in the low unemployment rates as many of the workers came to West Texas to take a job and left when the job was terminated and therefore would not be reflected in the numbers

Additionally, many Sellers with equity have a hard time with the new reality . One of my wife's employees in Austin are a good example. They owe $80k on a house that was worth in the neighborhood of $200k at the peak. They are now 4 months behind and getting evicted from their apartment in Austin. I suggested they drop the listing price from $189k to $149k to hopefully make their home the most attractive in the area. $50k profit in this scenerio changes their dynamic but....did they listen ? No , they thought an open house was the answer and when it didn't sell canned their agent and now the property is off the market as the still think they will make $100k because they say "it is worth it ". The most likely scenerio is the will get foreclosed on an lose it all before reality sinks in