Economist: Home prices in Odessa to rise

A national economic forecast firm expects steady growth for Odessa this year, in contrast not just to the United States overall but also its more prosperous sister city in West Texas.

The Fiserv Case-Shiller Indexes reports home prices are expected to grow in Odessa by 1.4 percent from the third quarter of 2011 (July 1 – Sept. 30) to the same time in 2012; they’re expected to rise an additional 1.1 percent by that period in 2013.

Meanwhile housing prices in the United States overall are expected to see a decrease of 2.7 percent by the third quarter of 2012 before finally beginning the long-awaited national recovery: Fiserv projects a 3.8 percent increase by the third quarter of 2013.

“In a balanced market, home prices grow with household income,” David Stiff, chief economist with the firm, explained.

Despite that, the firm projects home prices in oil-rich Midland have finally peaked and will come down this year.

From 2006 to 2011, Midland also saw an increase in housing prices of 27.3 percent but Fiserv expects to see a 0.7 percent decrease during 2012 before growing a modest 0.2 percent again during 2013 and 0.7 percent per year through 2016; Odessa housing prices are expected to increase 2.7 percent per year in the same span.

Amarillo Economist Karr Ingham didn’t agree with the somewhat pessimistic assessment for the Tall City.

“There have been modest housing price increases in recent years, and I can’t see anything at all to see that housing prices will decline,” Ingham said. “There is a shortage of housing and that is a recipe for higher prices.”

His numbers also seemed not to agree with Fiserv’s for the past year; though combining the two cities, Ingham reported the average home price for Odessa and Midland went up 6.8 percent in 2011 to $189,661.

According to the Odessa Board of Realtors, Odessa did see a small decline in the value of the average home sold when just comparing 2010’s and 2011’s third quarters ($155,195 to $154,904). But the average for the year as a whole was up 14.28 percent, to $162,085. Moreover, 62 more homes were sold in 2011, and December 2011 had the shortest average days on the market (72) since October 2007 (69 days).

Nationally, Stiff said home prices hit their peak in 2006, but then have declined 30.7 percent due to the U.S. housing bubble when mortgages for homes became more expensive than people could afford at the time. Texas, which saw an increase in housing prices of 4.3 percent since 2006, was one of the few states not severely hit during the housing bubble, Stiff said.

“I think the reason Texas weathered the downturn better than the rest of the country was because there was a spike in oil prices,” Stiff said.

Even in what might be the epicenter of the Lone Star State oil boom, purchasing a home is still a problem for some.

Steve Oliver with Steve Oliver Realtors said the reason home sales are so low is because the requirements to qualify for a mortgage have increased.

“In 2007, it seemed like the only requirement to get a mortgage loan was drawing a breath,” Oliver said. “Now it’s gone the other direction.”

Looking mainly at credit scores, Oliver said people from around the country have called him looking for homes, and he’ll refer them to lenders to get pre-approved for a loan before looking at homes. Because most people who contact him have low credit scores, Oliver said people will rent out a home or apartment while they rebuild their credit scores.

“It’s difficult for people moving into Midland and Odessa right now,” Oliver said.

Apartment and motel rates have been reported for the Odessa area near or at 100 percent occupancy, and Stiff said the index used does not factor in housing situation for each individual city.

Despite the lack of housing, Stiff said he expects housing to do better in the upcoming years everywhere.

“We expect this year to look better for the housing and the economy as a whole,” Stiff said.

@OAgovernment

Odessa housing trends, 2000 - 2011

United States, Texas, Midland and Odessa