We’ve seen more than a few reports come out recently saying that the market is in for a slow down. In fact, the Texas Real Estate Research Center at Texas A&M University recently released a report on that fact.
While in some markets, buyers are rejoicing at the prospect of a slowdown, in others, it speaks to a bigger trend. That’s why it was interesting to see that Midland, Texas, took the No. 2 spot in Realtor.com’s recent breakdown of the top 10 U.S. real estate markets seeing big price reductions.
“In our July data, about 45 cities from the top 300 largest showed an increase in the number of homes with price cuts,” said Realtor.com Senior Economist George Ratiu. “For buyers, these trends hold the promise of a less frenzied market, with more choice and better prices.”
Inventory is on the upswing, according to Realtor.com’s July 2021 data. In Dallas-Fort Worth, new listing counts are up 6.7 percent over last year. Still, there are 24.4 percent fewer active listings on the market year-over-year.
However, Midland’s real estate market is cyclical to the extreme. The whole Permian Basin region is susceptible to boom-bust cycles thanks to the historic link to the oil industry. When the price per barrel is high, the price for a home — or even a trailer parked in a dusty lot — is often just as lofty. When oil prices dip, the price reductions start.
However, Realtor.com data points to a different cause:
Despite oil prices reaching the highest levels since 2018, companies in the area have curbed drilling activity. That’s part of the reason why the unemployment rate in Midland stood at 6.7% in June, higher than the 5.9% reported nationally.
With fewer locals able to buy homes and fewer people moving to the area, demand just isn’t as frenzied as in the rest of the country.
To help his properties stand out, Chris Beckett, broker and owner at Pine & Beckett Realtors in Midland, says he cuts prices on his listings every seven to 10 days.
That strategy appears to be typical in this market—last year the share of price cuts was slightly higher, at 32%. Buyers in this area could take a look at this three-bedroom home with a recent $5,000 price cut.
Midland was second only to Des Moines, Iowa, in price reductions.
“Price cuts could signal a turning point in the market, but they may also just be a sign of sellers getting ahead of buyers in pricing,” says Danielle Hale, chief economist at Realtor.com. “There seem to be some markets where it’s a local custom to price real estate that way.”
