Home Buddies – Houston Credit Repair Coach for Investors and Homeowners

Economic News: Gas, Real Estate and Obama

So far this year the Houston economy has slowed by half. Unemployment is now trending up which will be a key factor affecting projections for real estate demand. However, we are still waiting to see the affects of the diminishing financial conditions and the drop in energy prices.

Real Estate
Real estate markets were hit hard by the one-two punch of the credit crunch and hurricane Ike. Existing home sales are down 29.5% over the past twelve months. New home sales are off by more than 50% over the past twelve months as well.
The Houston rental market continues to see strong demand that is driven by tighter credit standards that keep renters from becoming homeowners, and local job growth. With such a strong current demand for rentals, single family homes for rent should continue to be a hot commodity in key areas of the city. However, with the pace of new apartments coming online, the apartment rental market could begin to sputter as we move in to 2009.

Rig Count, Oil & Gas
During September and October drilling rose sharply. The strongest evidence was that the number of working rigs averaged over 2,000 for a full month. The last time 2,000 rigs were working for a full month was in 1985! However, the number has begun to fall back as energy prices have fallen. In addition, producers have announced cuts in drilling budgets as oil prices have fallen to under $70 and natural gas prices under $6.50. With this current trend we are probably coming to the end of Houston related hiring in the oil industry until financial and economic conditions improve.

Obama
Now that the elections are over, financial markets are shaky with the uncertainty of what the new president will do in order to assist markets. This uncertainty will cast a shadow over the economy leading into the first quarter of 2009.

Houston business owners should exercise extreme caution heading into 2009. Key fundamental drivers of the Houston economy are now beginning to pull back which points to a slowing Houston economy. However, without any exogenous shocks to the Houston economy, business owners as well as investors should be able to navigate through this economic transition.

Cliff Pape
Home Buddies