The housing market in oil-heavy economies has felt some impact from falling oil prices and the market oversupply.
The number of properties with foreclosure filings at the end of 2015 was the lowest in nine years at 1.1 million, according to a recent report from RealtyTrac. However, while national foreclosures fell to a nine- year low, some states contradicted the national trend—particularly those tied closely to the oil industry.
“In 2015 we saw a return to normal, healthy foreclosure activity in many markets even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis,” said Daren Blomquist, VP at RealtyTrac. “ The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low value properties.
“Meanwhile, local economic problems became a larger driver of foreclosure activity in 2015,” Blomquist said. “Examples of this are Atlantic City, New Jersey, which posted the nation’s highest metro foreclosure rate for the year, along with several heavy oil-producing markets in Texas and Oklahoma where foreclosure activity increased in 2015, counter to the national trend.”
To put it simply, oil is in abundance right now.
“We are oversupplied with crude production right now, given what the world demand is, and until the economy picks up, it’s going to continue,” Brian Busch, Director of Oil Markets and Business Development at Genscape said, according to CNBC.
Oil-dependent states are experiencing the effects of falling oil prices, and analysts say it’s impacting their housing markets.
Texas and Oklahoma ranked among the top five states in the nation for increased foreclosure activity in 2015, according to RealtyTrac. Foreclosures in Oklahoma rose 36 percent over the year, while foreclosures in Texas increased 16 percent.
Bank repossessions were up in a majority of states—41 states—but Texas posted one of the largest increases at 115 percent, according to RealtyTrac.
Additionally, just six of the nation’s 20 largest metros posted rising foreclosures over the year in 2015—Dallas and Houston among them. Foreclosures rose 25 percent in Dallas and less than 1 percent in Houston, RealtyTrac reported.
Despite the uptick in foreclosures, all is not doom and gloom in oil-rich states. For one thing, while Texas and Oklahoma both posted notable rises in foreclosures, neither state placed in the top 10 list for foreclosure rates.
Additionally, last year 150,000 jobs were created in Texas, many in sectors other than oil. About 2.5 percent of Texas’ job market is in the oil, gas, and mining sectors, Former Dallas Fed President Richard Fisher told CNBC earlier this year.
“One of the things that I strive to correct is that Texas is not just oil,” he said.