Crude oil has fallen below $30 a barrel, that’s a 12-year low, extending a relentless selloff that has wiped almost 20 percent off prices this year amid deepening concerns.
Home sales are reported down sharply in North Dakota and the West Texas cities of Midland and Odessa. Home sales have also slowed in El Paso, and, more recently, in Houston.
“After years of growth, the city of Houston is on a ‘watch list’ of sorts as mortgage companies and mortgage insurers reassess housing prices and area unemployment,” says the Collingwood Group Vice Chairman Brian Montgomery, “No panic button mind you, just a reassessment.”
Oil Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10.
By Tuesday, the crash had become almost self-fulfilling, with speculators too afraid to buy for fear of being burned by another false bottom.
“While Houston got religion of sorts following the 1980s energy boom/bust cycles, the city is still the ‘energy capital of the world,” says Montgomery, “I don’t envision a remake of the 1980s, but if I were moving there, I‘d pay very close attention to recent housing price patterns, comparable market sales, and current monthly inventory levels – I suspect they’ll be somewhat volatile for the foreseeable future.”
Clearly the economies of other energy states will be hurt and the bottom could drop out of the housing markets there.
“Either way,” adds Montgomery, “It is a slowdown.”