Houston Housing Market Nearing "Collapse"

[Account Closed]

"Houston is the only market that's is already looking dangerously close to collapsing." Personally, I feel collapse is a strong word and a bit alarmist. Interesting chart though, I like the blue Phase 2 section. Anyone like to chime in on the linked article? http://www.businessinsider.com/phases-of-the-housing-cycle-in-american-cities-2016-9

[Adam Chudy]

@Kevin Wood @Sean Xin I agree with your general comments on Houston but the downstream statements are a bit oversimplified. The refiners benefit based on the crack spread which is the margin between price of a barrel of oil and price they can sell the refined products that come out of that barrel (gasoline, diesel, jet fuel, etc...). 

Refiners often benefit from a drop in crude prices because there's frequently a lag between a drop in crude price and the drop in the price of outputs. Meaning the price at the gas pump doesn't move as quick as the price per barrel. However this relationship doesn't always hold and if a downturn lasts very long, the 2 will equal out and the benefit disappears. The gasoline demand is also a key component. 

If you go check out the refiners in 2016 they aren't doing particularly well as crack spreads have tightened significantly.