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Home price gains in Oklahoma's high-energy counties lag others in the oil patch

The Federal Housing Finance Agency included the special look at the stability of home prices in eight oil-and-gas-producing states in the years since the national housing bust as part of its third-quarter Home Price Index report.
BY RICHARD MIZE Real Estate Editor Published: December 3, 2011

The agency then calculated the 2006-2001 change in home prices based on single-family sales involving conforming, conventional mortgages bought or securitized by Fannie Mae or Freddie Mac — no jumbo loans or cash purchases.

Home prices in counties with the higher energy employment outperformed the other counties in every state but Oklahoma. Here, high-energy counties saw home price gains of 4.8 percent while the other counties saw better gains of 5.3 percent.

Statistically, it was close. Oklahoma was the only one of the states where the difference was less than one percentage point. FHFA principal economist Andrew Leventis said the small numbers the agency had to work with in Oklahoma probably played a factor in making the state an outlier in the study.

Other states

The FHFA also looked at Alaska, Louisiana, New Mexico, North Dakota, Texas, West Virginia and Wyoming. None of the state saw a drop in home values in high-energy counties.

North Dakota, where Oklahoma-based Continental Resources Inc. is the leading oil producer in the prolific Bakken Shale, saw the greatest increase, 39.6 percent. New Mexico had the least increase, at 1.9 percent.

Just two of the states saw a drop in home values in non-energy counties: New Mexico, at 8.2 percent; and West Virginia, at 4.1 percent.

‘Extraordinary' gains

Leventis said FHFA decided to look at home prices in the energy states because they “sort of jumped out in the data.” He called the gains in North Dakota “extraordinary.”

He said it deserved a special look because the boom in the energy sector, unlike come-and-go booms in farm commodity prices, is based not only on increases in oil prices but expanded production from the use of new extraction technologies.

The findings shouldn't be a surprise for Continental Resources. The company, based in Enid but moving to Oklahoma City this spring, has been dealing with strains in North Dakota's economic infrastructure almost since it took the lead in the Bakken Shale. Hotels fill as soon as they are built and crews are housed in portable buildings at drilling sites. In addition, Continental is a leader in new drilling technologies such as multiunit wells with horizontal drilling extending laterally thousands of feet.