• Major Texas metros may have hit their peak in terms of home prices.
  • The states most at risk for price declines are some of the least populated states in the nation.
  • Volatility within the energy industry will affect the homes sales markets for the next two years.

Five Texas metros and three states that are oil-dependent remain at a high risk for home price declines over the next two years.

According to Arch Mortgage Insurance’s latest market review, these at-risk Texas metros include Houston, Dallas, Austin, Fort Worth and San Antonio.

“Metropolitan areas tied to the energy industry are seeing home prices well above their historic long-term trends,” the market review stated. “This indicates that affordability in that state (Texas) remains a primary concern, and that home price declines could occur.”

In these Texas markets, home prices have risen year-over-year by at least 7 percent.

Houston image via Shutterstock.

Houston image via Shutterstock.

Houston leads these metros, having seen a 10 percent rise. Dallas (9.4 percent), Fort Worth (7.6 percent), San Antonio (7.6 percent) and Austin (7.1 percent) follow.

These price increases have equated to affordability dropping by 4 to 8 percent — with the exception of San Antonio, where affordability remained unchanged year-over-year.

As of the second quarter of 2015, unemployment rates declined. Houston showed the lowest rate of change at 0.7 percent, and Dallas saw the highest of those metros at 1.3 percent on a year-over-year basis.


Due largely to an expected pullback in energy-related income and employment, North Dakota, Wyoming and Alaska are the states most at risk for price declines.

With a 43 percent chance of seeing home prices decline over the next two years, North Dakota experienced a 1.8 percent drop in total employment over the past three months. It has also seen the largest run-up in home prices, with properties estimated to be overvalued by 16 percent.

Wyoming has a 36 percent chance of seeing home prices decline over the next two years, according to Arch Mortgage. The largest coal mining state (6 percent of employment) is being hit by a two-thirds drop in oil and gas rigs, coupled with a drop in coal prices. Home prices “decelerated rapidly” during the second quarter.

With a similar chance of seeing prices decline (35 percent), 20 percent of Alaska’s income stems from oil and gas revenue. The state also has a large budget deficient and stalling employment growth.

Risk for home price declines also remains above average in the energy-producing states of Louisiana, New Mexico, Oklahoma and West Virginia.

For most other states, the average risk of home price declines over the next two years remains low: 6 percent.

Email Erik Pisor

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