As Oil Prices Fall, Will Real Estate Follow?
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Falling oil prices have been a boon to cash-strapped consumers, but some real estate pros are wary of the trend's effect on property values.
With the price for a barrel of crude at a five-year low, energy-centric markets like Houston and North Dakota could see a slowdown in construction and leasing, Bloomberg writes. Indeed, Texas-based companies ConocoPhillips and Marathon Oil have both announced 20% spending cuts as oil prices have freefalled to nearly half their June levels. A hiring freeze would have a dramatic impact on the Houston office sector, in which energy tenants comprise a whopping 64% of leasing activity.
Of course, oil prices won't sustain their recent rate of decline. And analysts say prices would have to stay below the average break-even point for six months before significant real estate aftershocks are felt.