Oil Price Shocks Are Unlikely To Boost Houston Luxury Sales

Before John and Jihye Deveau became a husband-and-wife sales duo at Compass, both worked in Houston’s energy industry. They’ve still got old friends in the oil business — rank-and-file staffers, like geologists — and the spike in petroleum prices due to the Iran war means a windfall for some of them this year.

“Many of them are saying they expect to get bonuses that are equal to or greater than their annual salary,” John Devreau said.

But while a temporary boost can eventually buoy home sales for the staffers in middle-class neighborhoods, it’s unlikely to affect luxury sales in executive enclaves like the River Oaks, according to Devreau.

“I think, come February next year when people are starting to get their bonuses, you’re going to see a big uptick in the lower end and the middle range of the housing market,” he said.

Houston’s real estate market still courses with oil money, but the energy industry is sharing more and more of the economy with other industries. At certain points in the past, oil busts have crushed home prices in the city’s luxury neighborhoods while booms have sparked bidding wars. Today, on top of a diversified economy, tech advances have tamed the drilling business to such a degree that even this year’s historic price spike could have only a moderate effect on the residential market, according to Devreau and economists.

It’s a significant change considering what happened after crude oil prices tanked in 2015, dragging home values down by nearly half in River Oaks. The average sale price in Houston’s preeminent luxury neighborhood fell from $2 million in the middle of 2014 to $1.3 million in early 2016 after the fracking bust, according to the Houston Association of Realtors.

That bust is one of the reasons why energy companies are hesitant to seize the moment now, according to Jesse Thompson, senior business economist for the Gulf Coast region at the Federal Reserve Bank of Dallas. The speculative, exploratory process of conventional drilling heaped up “huge amounts of debt” that toppled into a long stretch of bankruptcies reaching to 2019, Thompson said.

“I like to say the oil and gas industry had a pre-existing condition when it caught COVID,” Thompson said. “And it was bad.”

Equipped with more predictable drilling methods and warned by the hard lesson of 10 years ago, oil outfits have learned to take it slow.

“It used to be, in an oil price spike, you’re going to get some wildcatters doing some extra wells, and you’re going to get some spending, and that spending is going to entail a lot of hiring, and they’re going to buy a lot of manufactured product from manufacturers who are overwhelmingly based in Houston. And so you see this knock-on effect to the whole economy from that. Now, that risk-taking is gone,” Thompson said.

As a result, only the middle and lower tiers of the residential real estate market are likely to ride the current spike — and even then, sales growth could be only marginal.

“Until you see that the industry is starting to send their rigs out a lot, you’re not expecting to see any kind of real economic impact in the Houston area,” said University of Houston economist Adam Perdue.

In addition, the city’s economy is diversifying. As a result, doctors, scientists, manufacturers and financiers can prop up home prices in neighborhoods formerly more sensitive to the fortunes of wildcatters.

“The rest of Houston is growing so much more, and oil and gas has gotten smaller in and of itself,” Perdue said.

Even though the oil industry shrank more than any other leading employment sector in Houston over the past year, according to the Dallas Fed, home sale prices rose in Houston’s luxury neighborhoods during roughly the same period. In the 77024 ZIP code, which Zillow clocks as the wealthiest in the city, the average median sale price increased from about $1.8 million in 2024 to $2.1 million in 2025 — even while the average Houston home depreciated.

For now, oil trends aren’t minting any new River Oaks residents. The industry’s effect on the residential market will likely be confined to the middle class.

“I think we’re going to see a lot of buyers come to market next spring who have been on the fence this last year in the bottom half of the market,” Devreau said.