Home prices hit by oil-prices

by Donald Horne13 Oct 2015
According to Arch Mortgage Insurance’s latest Edition of its Housing and Mortgage Market Review, areas most dependent on oil remain at a higher risk for home price declines over the next two years.
 
“The risk, due largely to an expected pullback in energy-related income and employment is notably highest in three states,” says Dr. Ralph DeFranco, Arch MI’s senior director of risk analytics and pricing. “Those are North Dakota, Wyoming and Alaska.”
 
North Dakota has a 43% chance of seeing home prices decline over the next two years; Wyoming a 36% chance; and Alaska a 35% chance.
 
However, one state famous for its oil production is bucking the trend.
 
“For most other states, the average risk of home price declines over the next two years remains low,” Dr. DeFranco told MPA, “though certain metropolitan areas tied to the energy industry (including five in Texas) are seeing home prices well above their historic long-term trends. This indicates that affordability in that state remains a primary concern.”
 
Falling oil prices in the 1980s contributed to tumbling home prices in oil-producing states, and a recent Fannie Mae report shows that there will be a five-year drag on home price appreciation for oil-producing states, but not the drastic devaluation witnessed some three decades ago.

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