Housing Shortages Persist In The Permian Basin. But Odessa Housing Prices Stay On The Low Side.

By Mitch Borden

Midland and Odessa are growing — fast. A recent report put out by the U.S. census bureau showed both 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, which won’t be 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 both communities are seeing housing prices rapidly shoot up, 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.

Streets waiting for a neighborhood to be built around them. (Mitch Borden/Marfa Public Radio)

Odessa and Midland are at the center of the oil boom in the Permian Basin. About a decade ago, hydraulic 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.”

Right now, it’s just some walls and cement floors, but Brazile sees the potential.

He said, “[Here’s] a long corridor leading us to an open living room. You can see the kids playroom. This house actually has two kitchens. ”

Brazile runs a high-end custom home construction company that works in both Midland and Odessa. According to him, 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.

But, if you look at the numbers though, it’s clear that homes in Midland, on average, are way more expensive than in Odessa — even though there’s a huge demand for housing in both cities.

Brazile said that doesn’t make sense.  

“There’s no difference between a house in Odessa and a house in Midland.”

On average in 2018, a house in Midland sold for $284,000, but in Odessa homes usually went for $200,000. That’s almost a difference of $100,000.

Kay Sutton has been a realtor in the area for over four decades.

(Mitch Borden/ Marfa Public Radio)

According to her, “Most people automatically assume that houses are cheaper in Odessa than they are in Midland.”

She said that’s not true. Sutton explained, 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.”

Since oil was struck in the Permian Basin in the 1920s, Midland has held on as the corporate center. Kay said that means more of the higher paying jobs are based in Midland like executives, geologists, and engineers.

“We have more of the management for the oil industry based in Midland than Odessa does.”

While 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. According to Dr. Jim Gaines, the chief economist at A&M’s Real Estate Center, it’s right up there with Austin. He said 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.”

Midland’s average household income in 2017 was $58,919 according to the U.S. Census Bureau. Odessa’s was $75,646.

Gaines said, “[The two communities] basically have two different markets.”

Streets are paved, named, and lined by street lamps in this empty development. All that’s left to do is build the neighborhood. (Mitch Borden / Marfa Public Radio)

Midland and Odessa’s housing markets really mirror one another. In 2018, around 62 percent of the homes sold in Midland last year went for above $250,000. While in Odessa, 73 percent were priced less than $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 said, 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.”

Either way, both cities have a long way to go before they catch up with their growing populations.

*Editors Note: In a previous version of this story, horizontal fracking was credited for the Permian Basin’s current upswing in oil production. This term was misleading. It was a combination of two parts of the production process, horizontal drilling, and hydraulic fracturing. The term was changed to the more accurate hydraulic fracking.

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