Tuesday, February 10, 2015

Hedging the Houston Apartment Market via Property Management Insider

The stunning decline in oil prices during the past year has Houston real estate investors on edge. The obvious worry is that slower employment growth will reduce demand for commercial and residential real estate. As a result of weakening demand, the pace of rent and revenue growth is expected to slow. So given this event-driven risk, what is the best way to hedge your Houston exposure?

First, you can do nothing. Seriously. Per the chart above, the current West Texas Intermediate (WTI) crude oil price is nearing the long-term average since 1984, which should give us some confidence the bottom is near. With that being said, given the supply glut, the market is still trying to find a bottom and could easily overreact, pushing prices for a barrel of crude oil into the $30s.

Read more...Hedging the Houston Apartment Market | Property Management Insider

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