Home >> Daily Dose >> Oil-Producing States at High Risk for Lowering House Prices
Print This Post Print This Post

Oil-Producing States at High Risk for Lowering House Prices

Research released by Arch Mortgage Insurance Company in its Winter 2015 Edition of Housing and Mortgage Market Review showed an increased risk of lowering home prices in oil-producing states. Midland, Texas ranked highest for risk of lowering home prices at 60 percent. States and cities were examined on the likelihood of home prices being lowered in the next two years, based on recent economic and housing market data.

States with high levels of employment in the oil industry show a large increase of risk scores due to the declining price of oil, according to Ralph DeFranco, Arch MI’s Senior Director of Risk Analytics and Pricing.

“Our findings in this edition show that, while the national average risk score remains low at 8%, risk scores of states with high levels of employment in the oil sector, including North Dakota and Louisiana, have risen sharply,” he said. “Additionally, the highest individual MSA risk score was registered by Midland, Texas, due to a high level of employment in the oil and gas sector.”

Louisiana, with a 35 percent chance of decline, and North Dakota, at 37 percent, moved into the moderate-risk category, while six states, Alaska, Colorado, New Mexico, Oklahoma, Texas and Wyoming, registered in the 15-20 percent range. New York had the largest improvement in score showing a probability of only 9 percent.

“While no one knows if current oil price levels will be sustained long-term, we view the dramatic decline in the price of oil as having a real and meaningful impact on the potential for home price declines in these regions. As a result, our ranking for the highest-risk states and MSAs (metropolitan statistical areas) has shifted significantly since our last publication of the Review, the Fall 2014 edition,” DeFranco said.

Atlantic City, New Jersey, also showed high risk with a 57 percent chance of increase. Continued high unemployment and decline in home prices over the past year were reasons cited for the high score.

Continued high unemployment and decline in home prices over the past year were reasons cited for the high score.

While Franco does not foresee a drastic decline in home prices as severe as seen in the 1980’s, he believes the lasting impact of  the decline in oil prices in these states could be felt for the next several years.

“Home prices tend to have a lot more momentum,” he said. “It’s not overnight. One year prices could drop two percent, the next year it could be three.”

About Author: Samantha Guzman

Samantha Guzman is an award-winning visual journalist and graduate of the University of North Texas Mayborn School of Journalism. She specializes in visual storytelling and has skills in video, audio and photography, in addition to news writing. She has traveled to Mexico and Bosnia as an assistant for multiple multimedia projects and taught news writing, photojournalism, and narrative storytelling in the past.
x

Check Also

Selling Your House for Bitcoin

The housing market’s unfettered rise over the last year has been nothing but historic as homeowners ...

Subscribe to MDaily

MReport is here for you to stay on top of important developments in the mortgage marketplace. To begin receiving each day’s top news, market information, and breaking news updates, absolutely free of cost, simply enter your email address below.