The Orange County (Calif.) Register columnist Jonathan Lansner explains why crude oil might create the next housing problem.
Energy woes seem to be the big worry of analysts from Arch Mortgage Insurance Co. in their winter report on housing’s challenges. Lansner writes:
AMI’s risk measures—based on real estate metrics plus broad economic fundamentals—clearly find trouble within the nation’s oil-producing regions. Five Texas cities sit atop AMI’s ranking of housing risk in the 50 largest metropolitan areas. Plunging crude oil prices turned the once-hot energy sector into a job cutter and economic drag in many parts of the nation.
Houston was the nation’s riskiest market this winter, with a 36% chance of home price declines within the next two years. Then came Austin, Dallas, Fort Worth and San Antonio —all with a 26% risk of home losses. Just 18 months ago, there were 29 riskier markets than Texas’ high-risk market —Austin was the 30th riskiest region among the 50 largest U.S. cities.