Highlights from this report:
- Odessa and Midland, TX were among the 10 hottest housing markets in April 2019.
- This was based on a recent analysis conducted by Realtor.com.
- Home prices in both cities rose by double digits over the past year.
- But other West Texas real estate markets are seeing much smaller gains.
Midland and Odessa Among the 10 Hottest Housing Markets
On May 7, 2019, Realtor.com published an update to its long-running list of the hottest housing markets in the U.S. The company’s economic research team analyzes real estate conditions in cities across the country to determine which ones are the most competitive.
The hottest housing markets are “identified by how fast homes are selling in each metro and how many views that metro’s listings receive, both of which reflect buyer demand,” according to the report.
Two real estate markets in West Texas remained in the top ten for April 2019. Midland and Odessa appeared in the #6 and #9 spots, respectively.
The table below shows Realtor.com’s “hot list” for April 2019. These are real estate markets where properties are selling relatively fast, due to strong demand from buyers. Home prices are rising steadily in most of these housing markets as well.
|Metro||Rank (April 2019)||Rank (March 2019)|
|Lafayette-West Lafayette, IN||2||8|
|Spokane-Spokane Valley, WA||3||14|
|Colorado Springs, CO||8||6|
* Table adapted from a Realtor.com report in May 2019.
Double-Digit Home Price Gains in These Two Cities
Aside from appearing in the top-ten list above, the Midland and Odessa real estate markets have something else in common as well. In both cities, home prices are rising rapidly in 2019.
In fact, the median home values for both of these markets rose by double digits over the past year. That’s well above the national average for the same time period.
Midland, Texas in particular has seen major home-price growth over the past year. And additional gains are expected for the foreseeable future.
In May 2019, the housing research team at Zillow wrote: “Midland home values have gone up 19.5% over the past year and Zillow predicts they will rise 9.4% within the next year.”
To put those numbers into perspective, home prices nationally rose by about 6% over the past year (on average). And the team at Zillow are predicting an additional gain of 2.8% over the next 12 months. So clearly, the Midland real estate market is outperforming the national average by a long way.
Odessa, Texas has also experienced significant home-price growth over the past year, with a strong forecast stretching into 2020. The median home value in that Texas city rose by 15% over the past year, according to Zillow. The company’s analysts predict a gain of around 7% over the next year (projecting into May 2020).
But not all West Texas housing markets are experiencing such huge increases in house prices. In other cities across the region — including Abilene and San Angelo — home values are rising at a more modest and “normal” pace in 2019. So this appears to be a highly localized trend, as opposed to a regional one.
In terms of annual price growth, the Odessa and Midland real estate markets are anomalies. Perhaps that is why they have appeared on Realtor.com’s hot list, yet again.
Oil Production Brings High Wages, Turning Renters Into Buyers
Oil production has a lot to do with the increased demand for homes in Midland, Odessa, and other West Texas cities. The Permian Basin stretches through this part of the state, and it does a lot for the local economy.
According to an April 2019 Bloomberg article:
“The Permian [Basin] rose from the dead with the advent of fracking a decade ago to become a market beast, producing about a third of U.S. oil as it grew to become one of the world’s most prolific oilfields.”
This high level of production has brought a lot of high-paying jobs to the region, giving many residents the financial means to make a home purchase. This partly accounts for the increase in housing demand within the Midland and Odessa real estate markets — and the big price gains that have resulted from that demand.
Population Growth Creates Housing Shortage in Midland & Odessa
Meanwhile, there is a shortage of homes for sale in these housing markets, relative to the number of buyers in the market. This too is putting upward pressure on prices. And it’s largely the result of population growth.
In April of this year, the U.S. Census Bureau put out a report that showed Odessa and Midland were among the fastest-growing metro areas in the country. In fact, they ranked in the top ten.
- Midland, Texas was the fastest-growing U.S. metropolitan area in 2018, with a 4.3% increase in population from 7,383 new residents.
- Odessa, Texas ranked fifth among the nation’s fastest-growing metros in 2018, with 3.2% population growth during that one year alone.
According to the Census Bureau report: “Positive domestic migration contributed to the growth in both areas.”
So we have a “perfect storm” of factors driving the huge home-price gains in the Odessa and Midland real estate markets. There are plenty of well-paying jobs in the area, thanks in part to the oil industry. This attracts new residents from elsewhere across the state and the nation. Rapid population growth, in turn, has led to an increase in housing demand and a shortage of homes for sale.
Given all of these factors, it seems likely that these two housing markets will continue to outpace the national average for the foreseeable future.
Disclaimer: This article contains forecasts and predictions provided by third parties not associated with the Home Buying Institute. These forward-looking views are the equivalent of an educated guess and should be treated as such.