House Price Declines May Be In Store for Some Oil-Producing States: A Repeat of the 1980s?
With oil prices continuing to fall over the past month, the notion of "lower prices for longer" is increasingly becoming the consensus view. As a result, the prospect of an oil bust draws comparisons to the past slump of the 1980s. While most Americans enjoyed lower gasoline prices over that period, severe employment losses occurred within the oil industry, and many oil-producing states experienced general economic slowdowns and declining house prices. Is the situation today going to be a repeat of the 1980s?
In this edition of Housing Insights, Fannie Mae’s Economic & Strategic Research Group projects cumulative five-year (2014-2019) house price growth "drags" caused by this past year’s oil price decline for 10 oil-producing states. The analysis utilizes the historical 1980s relationship between oil prices, employment, and house price growth. How states' economies have changed over the years and how the "fracking" revolution in the oil industry could respond to the price decline is analyzed and discussed.
To learn about the findings, read our latest edition of Housing Insights.