From Marfa Public Radio:
Midland and Odessa are growing fast. A recent report put out by the U.S. Census Bureau showed the cities in 2018 were two of the fastest-growing communities in the country. But both cities have a big problem – they don’t have enough housing. That isn’t a surprise to anyone who’s tried to buy or rent there in the last few years.
What may be surprising is that even though housing prices are rising rapidly in both communities, it’s far cheaper to buy a house in Odessa than it is in Midland.
There are housing developments being constructed all around Odessa. Some are just a maze of roads, street lamps and vacant plots of red caliche, waiting for houses to be built.
Odessa and Midland are at the center of the oil boom in the Permian Basin. About a decade ago, horizontal fracking reignited the region’s oil industry. Since then, the two communities have been growing faster than houses can be put up.
Colby Brazile strolls through a house he’s currently working on at the edge of Odessa. He points out how constructions going.
“It’s just pretty simple in here and walking into the house,” Brazile says.
Right now, it’s just some walls and cement floors. But Brazile sees the potential.
“[Here’s] a long corridor leading us to an open living room. You can see the kids’ playroom. This house actually has two kitchens,” he says.
Brazile runs a high-end custom home construction company that works in both Midland and Odessa. He says the Permian Basin is like the wild west right now. There’s a lot of money. People are coming from all over to work. And, the housing shortage is making it more and more expensive to buy.
Brazile says that doesn’t make sense.
“There’s no difference between a house in Odessa and a house in Midland,” he says
On average in 2018, a house in Midland sold for $284,000, but in Odessa homes usually went for $200,000. That’s a difference of almost $100,000.
Kay Sutton has been a realtor in the area for over four decades.
“Most people automatically assume that houses are cheaper in Odessa than they are in Midland,” Sutton says.
She says that’s not true. Sutton says houses built in Odessa typically aren’t as high-end as Midland homes, which is why they’re more affordable
“It’s not that you’re going to get more house for your money in Odessa. It’s that they have a stronger market for the moderately priced homes,” she says.
Since oil was discovered in the Permian Basin in the 1920s, Midland has been the corporate center. Sutton says that means more of the higher-paying jobs are based in Midland, including executives, geologists and engineers.
“We have more of the management for the oil industry based in Midland than Odessa does,” she says.
Odessa residents have traditionally worked jobs that are lower-paying, like oil field workers.
Some think the demographics are shifting and the two communities are becoming more similar. But that doesn’t line up with their housing markets. Despite the dramatic shortage, Odessa’s average home price is under the state’s average, which in 2018 was $232,000.
Midland, which is just twenty miles away, ranks as one of the most expensive places to buy a house in Texas.
Dr. Jim Gaines, the chief economist at A&M’s Real Estate Center says Midland home prices are right up there with Austin. He says the reason for this difference is simple, Odessa residents largely make less than Midlanders.
“It’s most noticeable, not only in the difference in median and average home prices but in the difference in the median and average household incomes,” he says.
Midland’s average household income in 2017 was $58,919 according to the U.S. Census Bureau. Odessa’s was $75,646.
“[The two communities] basically have two different markets,” Gaines says.
Midland and Odessa’s housing markets really mirror one another. In 2018, around 62 percent of the homes sold in Midland went for above $250,000. While in Odessa, 73 percent were priced below $250,000.
Gaines said the disparity between the communities probably won’t change anytime soon and both cities will continue to see prices go up as the housing shortage continues.
That could mean, he says, more people may start looking for homes in Odessa.
“If Midland becomes so pricey, then some of the people who might have otherwise bought a home in Midland might come down and buy a home in Odessa simply because it’s priced better — and commute. I mean, it’s only 20 miles that’s nothing,” Gaines says.
Either way, both cities have a long way to go before they catch up with their growing populations.