CORPUS CHRISTI – Plunging oil prices may be a relief for Coastal Bend residents at the pumps, but they’re having little influence on rents or mortgage payments.
Experts predict the falling price of crude will force housing costs in energy-dependent Corpus Christi to drop at some point.
That day won’t come in 2015, they say.
The housing market in Corpus Christi is perhaps the tightest it has ever been for both potential renters and those looking to buy a home. Things won’t change for the rest of the year, despite a rush on home and apartment construction, said Jim Lee, the chief economist at Texas A&M University-Corpus Christi.
Oil field workers who lived in apartments in Corpus Christi are moving to Alice, Cotulla and other small towns within the energy play to be closer to work, said Melissa Gomez, a broker for AAA Apartment Locating in Corpus Christi. Others have been moving out of higher-end luxury apartments and into older, more-affordable complexes to cut costs.
The exodus has created hundreds of apartment vacancies since November, but rent prices remain unchanged. Instead of lowering rents, property managers have eased move-in criteria to insure occupancy. Applicants with credit and rental-history blemishes and those whose income is less than three times the cost of rent are no longer being disqualified for apartments.
“We’ll see a decline in occupancy rates here and there … but they (complexes) won’t empty out,” Gomez said.
The average price of homes in Corpus Christi hit a record high of $207,700 in December, according to the latest data from the Real Estate Center at Texas A&M University. That same month, the asking rent for a typical apartment in the city was 25 percent higher than it was just four years ago.
Five recently completed apartment complexes have been cleared since March to take in tenants. Another dozen are in various stages of construction and are due to open in coming months.
The Corpus Christi area’s apartment occupancy rate was 92.5 percent in December, according to ALN Apartment Data, a Carrollton-based firm that tracks rental property trends. That’s down from 94.3 percent in November and the record months of December and April, when occupancy hit 95.2 percent.
Average rent in Corpus Christi in December was between $842 and $880, an ALN report said, though it’s not uncommon for newer complexes to ask for more than $1,100 for a one-bedroom home.
Corpus Christi’s low unemployment has been a magnet for thousands of job seekers in the past three years, most of them eyeing work in the Eagle Ford Shale energy play. The trend has slowed recently as energy companies have scaled back shale production, even shaved jobs, trying to remain profitable.
Falling oil prices and cutbacks in shale oil production by energy companies will put “downward pressure” on the local housing market, Lee said. However, the majority of newly constructed apartments are likely to be absorbed by students at Texas A&M University-Corpus Christi and personnel from the nearby Naval air station.
“The overall housing market in Corpus Christi, including single-family rental houses, will likely soften up after reaching its current peak, but the market for apartments might continue to be tight at least the rest of the year,” Lee said.
Apartment occupancy in Corpus Christi in January 2010 was 89 percent, and average rent was about $700.
Warren Andrich, CEO of the Corpus Christi Association of Realtors, was optimistic about the home sales market, while conceding more rental property was needed in the city.
The Real Estate Center reported that 375 homes were sold in Corpus Christi in December, typically a slow sales month.
The Coastal Bend’s economy, though heavily influenced by the energy industry, is diverse enough to support an increase in housing, Andrich said.
Although homes values are increasing and are being sold at or near their asking prices, Corpus Christi’s inventory of affordable homes — those priced between $125,000-$165,000 — is less than 300 units.
“These are all indicators that we were in need of the additional rentals coming on the market,” Andrich said.
Corpus Christi Apartment Market (December 2014)
Occupancy Rate: 92.5 percent
Asking Rent: $880
Effective Rent: $873
Average Apt. Size: 850 square feet
Average Market Rent Breakdown By Floor Plan
1 Bedroom, $753
2 Bedroom, $944
3 Bedroom, $1,084
4 Bedrooms +, $2,181
Source: ALN Apartment Data
Housing Activity (Annual figures)
Year No. of sales Average price Median Price Months of inventory
2004 4,745 $132,100 $113,800 4.6
2005 4,894 $147,300 $125,200 5.0
2006 5,192 $153,300 $130,400 6.2
2007 4,510 $162,000 $136,500 7.4
2008 3,773 $162,200 $138,900 9.0
2009 3,444 $155,500 $134,800 10.2
2010 3,445 $152,300 $136,500 10.3
2011 3,396 $157,500 $135,700 9.5
2012 4,058 $169,900 $142,300 7.1
2013 4,589 $180,700 $152,200 5.3
2014 4,721 $197,100 $168,600 4.5
Source: Real Estate Center, Texas A&M University.