The Price of Oil and its Effects on Austin’s Real Estate

Falling oil prices have been a blessing to the majority of consumers, especially during the recent Holidays, but some real estate professionals have become increasingly watchful of the trend's effect on Texas’ real estate property values. Texas has been known for its overall prosperity, and higher oil prices have played a large role in the states’ economic drive, which has been reflected in the high home values.

Economist, Amy Jordan, recently stated that, “The main thing causing uncertainty and thus less optimism from our respondents (for the overall Texas economy as well as their specific businesses and industries) is declining oil prices and the unknown of how exactly businesses in Texas will be affected.” Amy supports her statement by reflecting on some of the recent concerns of local businesses. One of the comments highlights the main concern regarding the Texas real estate market and it’s relationship with the dropping oil prices:

“We are very focused on oil prices. Being a firm with a material interest in the energy markets, we will see how collapsing oil prices impact the market and our customers. We believe activity will be muted somewhat as this plays out during the first few quarters of next year.’ ‘Although we’ve seen only one project delayed so far, we are anticipating a decline in local commercial real estate activity due to depressed oil prices.’’

However, economists have noted that a decline in real estate activity may be confined to rental rates, rather than investment sales, and that the lower oil prices may actually be a good thing in the long-term, likely shelving a lot of potential new starts. The area may have lost jobs in tech and manufacturing, but gained jobs in education, health care and hospitality. Things like the University of Texas and the state government help keep the job market relatively stable as well.

As jobs return, real estate inventory will reduce and that is good news for the Austin real estate market. Additionally, that means more opportunities from the potential buyers. So, while the decrease in the price of oil has significantly affected the real estate market in Texas, real estate professionals in Austin can, for now, take a sigh of relief that they may be much less negatively affected.