Today I figured I would share what’s going on locally in Houston. The city is in a pinch like the rest of the US. Here are things I’m following locally. We have at least a few more weeks in my opinion of strong influence from the virus!
Crude oil price dropped to $20 a barrel which is the lowest since the early 2000s. Demand for jet fuel, gasoline, and other oil based products are way down. This is further exacerbated by the fact that Russia and Saudi Arabia are fighting over market dominance and have actually increased production during this time.
Oil and gas companies are attempting to cut expenditures by as much as 30% along with production. ConocoPhillips for example is cutting their budget $700M and 20K barrels in production per day.
Many oil and gas companies are already furloughing (forced unpaid time off) workers. Experts are predicting around 8k jobs lost. Oil and gas is the second largest sector after medical.
It’s expected that the SBA will claim Harris county as a disaster area for Coronavirus. Other counties in Texas have already been named. Every day the SBA is releasing more states and counties while trying to limit server overload with applications. If you are a small business impacted you can follow the approved areas here.
Due to Federal regulations evictions have been stopped through the month of March in Houston and most likely April as well. This is scaring many landlords as mortgage payments must continue to be made. We are working with tenants and owners to keep everyone informed. We’ve considered allowing residents to use their security deposit to pay rent and create a payment plan to refill it over the lease term.
AirBnb and other short term rentals are feeling a lot of pressure as travel has fallen off a cliff. Bookings for our properties are down about 50%. We wrote a quick guide yesterday on some tricks and tips. You can find that here. My guess is that through at least April we will see a material impact to bookings. If it goes much further than many AirBnb landlords will need to look for alternatives to fill their housing.
Medical is in high demand right now. The medical center and other local area hospitals have a flood of visitors due to coronavirus. Numbers are not out yet on the economic impact, but it will be substantial. Grocers as well are hiring extra workers and benefiting from the excess buying of consumers. Many supply chain providers are also benefiting from the increased demand. Amazon has announced 6,000 new jobs for the state of Texas as a result of excess demand.
Folks earning less than $100k may be entitled to a household payout of $1000. The worry is that the execution of this payout could take months. Many families in the US can't afford even a $1,000 change in income. This will hopefully alleviate the non-payers for rent.
This too shall pass. It’s going to be a painful 2 or 3 months for a lot of folks. If people are anything they are resilient and adaptive. I am hopeful that as a country we are able to start the rebound sooner rather than later. Check back soon for the latest information as we continue to monitor everything from the short term rentals to the property management in Houston.