Prices for mansions in Houston’s swankiest neighbourhood have tumbled in lock step with crude prices. The Houston Opera has offered free season tickets to patrons who lost their jobs in the oil bust. A fancy restaurant offers cut-price dinners.
Twenty months into the worst oil price crash since the 1980s, well-heeled residents of the world’s oil capital are among the hardest hit largely because tanking energy firm shares make up much of oil and gas executives’ compensation.
In River Oaks, a neighbourhood of palatial mansions and lush gardens, the average sales price of a home has tumbled to $1.3m (€908,000) from $2m in the middle of 2014 when oil began its more than 70% slide.
Median property prices in the area have already fallen further in this downturn, which is not yet over than the 16% drop in the previous oil slump in 2008 and 2009.
City-wide data also show that while overall sales of single family homes fell 2% in January, sales of those priced over $500,000 tumbled 9%.
The overall median house price was $200,000, up 5% on the year.
While Houston’s economy is far more diversified now than in the 1980s, when the city lost 13% of its jobs due to the price crash, it remains home to 5,000 energy-related firms and the fortunes of oil and gas executives are tied more than ever to the energy market.
Luxury car sales are also slower in Houston than in other parts of the state and the country.
“If you’re working for an energy company, you see all this stress around you. It might nick your purchase confidence, even if you are fairly high income,” Earl Hesterberg, chief executive of Houston-based Group 1 Automotive, said.
He said excess inventory was most acute for top line BMW and Mercedes-Benz models in Texas and Oklahoma.
In a nod to the downturn, Ouisie’s Table, a River Oaks institution, is now offering its ‘Oil Barrel Bargain’, a three-course dinner for the price of a barrel of oil, now around $30.
To be sure, oil executives are not alone in feeling the pain. Many blue collar jobs in oilfield equipment production have disappeared.
A regular Uber customer is likely at some point to ride with a former energy industry professional.
Job growth has slowed to a crawl from the breakneck pace of 100,000 a year experienced during the oil boom; housing starts are down and subleasing of new office space is rising.
So far, however, owing to its diversity, the metropolitan economy has shown remarkable resilience.
Bill Gilmer, a University of Houston economist, says that, so far, it has paid off to tough it out through oil’s booms and busts and notes that ever since 1969 Houston has consistently ranked among the fastest growing US cities.
“The only problem is that it can be a roller-coaster,” said Mr Gilmer.
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