Hundreds Of Homes Set To Be Built In 2015
by Rye Druzin
As oil prices have halved in the last six months, Midland’s feverish housing industry hasn’t let up.
Some residents may be wondering about conditions with the price of oil below $50 a barrel and companies announcing budget cuts and layoffs. But home builders do not see themselves pressing the brakes anytime soon. They have capitalized on what some have called “pent-up demand,” with more than 900 building permits issued in 2014 for new residences.
“We set our goal to build 300 homes in Midland in 2015,” Claudia Valdez, marketing coordinator for Betenbough Homes in the Midland and Odessa area, told the Reporter-Telegram in a phone interview.
“We’re not adjusting that; we’re still aiming to build 300 homes, and we believe that is still the best for the community.”
Average home price for Midland passed the $300,000 mark in June and November (December data is not available). Between June and November (the latest figure available), average and median home prices in Midland continued to grow by 13 and 9 percent, respectively, year-over-year, according to figures from the Real Estate Center at Texas A&M. While the average price grew faster in 2014 than 2013, the median home price growth was 4 percent lower than 2013, indicating that the rapid growth of median homes prices has slowed.
Statewide growth rate in 2014 for average and median home prices was 6.2 and 7 percent, respectively.
The number of homes available also has driven up prices. Midland has had fewer than four months of inventory since November 2011. This housing shortage has driven demand as thousands of people have moved here to respond to the demand for workers in the oil field and support services. The civilian labor force grew by more than 4,000 — to 100,300 — between November 2013 and November 2014, according to the Bureau of Labor Statistics.
“We could have sold twice of what we did in 2014,” said Mark Payne, owner of Mark Payne Homes. “We couldn’t build it. Part of that is labor and management being able to oversee that.”
The home builders interviewed by the Reporter-Telegram all seemed confident in the strength of the market, citing the steady level of demand and waiting lists as indicators that residents still wish to buy homes in Midland.
Permian Homes president Dave Cook, whose company moved into Midland last year, said the Tall City continues to be his favorite and most successful market. Even with the price of oil falling, Cook said that the future contracts they have will give them time to adjust if needed.
“We’ve had so much pent-up demand, we have contracts that are written for a year out,” Cook said. “We have the letters, the money and the contracts. We have enough solid sales in front of us that we’re not going to slow down, we’re going to try to build those houses. It would be silly for us to slow down when we already have a contract on a buyer.”
In 2009, the real estate market in Midland experienced a slowdown, compared to the wholesale collapse of the nation’s real estate market. Locally, the market contracted by 1.3 percent year-over-year, while nationwide housing prices fell by more than 15 percent, according to figures compiled by The Economist magazine.
While oil prices have continued to fall to levels unimaginable even two months ago, many people have talked about putting a hold on making firm investments — whether out in the oil field or within Midland.
“There’s a lot of people talking confidence, but I think if I was on the market, I may go into wait-and-see mode,” Payne said. “For one thing, housing — any kind of housing — is hard to get, whether it’s rental or not. I think we’re all in a kind of wait-and-see mode, or at least that’s the mode that I’m in.”
Valdez said that Betenbough currently has a three- to four-month waiting list for initial construction of a new home, and that while oil prices may be a concern, it is making people think more critically of what they wish to build.
“I think you just have people who come through the door who are more realistic about their finances, and so they may be saying, ‘Do we really need a fourth bedroom?’” Valdez said.
The Tall City, in the center of the shale oil revolution, is still trying to see how the current order of low oil prices will take shape, and how those effects will trickle down to the local population. For Cook, diversifying Midland’s economy would help alleviate the strain of the up-and-down nature of the oil industry and give builders better confidence in the future of the city.
“I’d like to think that Midland and Odessa will eventually grow out of the cyclical nature of the oil industry, where oil is not the defining end-all-be-all of the population,” he said.
The Reporter-Telegram was unable to reach DR Horton for comment.