Economy & Economic Development  February 4, 2015

Wells Fargo: Oil downturn could hit Weld real estate hard

The oil downturn could affect Weld County’s residential real estate market to a greater extent than in other oil-producing counties in other states, according to a report from Wells Fargo & Co.’s economics group.

The report from Wells Fargo (NYSE: WFC) states that the slowdown will dent the county’s booming housing market and other industries that rely on workers’ rapidly growing incomes. That’s because many of the people who work in Weld also have homes in the county, unlike in remote places in North Dakota and Wyoming, where companies have established temporary housing for workers. Weld County produced 80 percent of the state’s oil in 2013.

“When the (job) cuts come, assuming that they do, it bodes worse for Weld County than it does for these other places,” Wells Fargo economist Mike Wolf said. “Then you see an uptick in the number of homes that are for sale, home prices stagnate and it debilitates the new (home) construction market, or drastically slows it down.”

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The report comes as the price of West Texas Intermediate crude oil sank Wednesday more than 8 percent to $48.58 per barrel, far below highs topping $100 per barrel last summer. The analysis notes that oil industry employment does not appear to have suffered a dramatic slowdown in hiring statewide because rig counts exploring for oil and natural-gas remaining relatively stable.

Colorado lost one rig last week for a total of 63, according to Baker Hughes Inc. (NYSE: BHI). The Denver-Julesburg Basin lost two rigs from the week before, dropping to 51.

Colorado had 62 rigs and the Denver-Julesburg Basin had 55 rigs during the same period a year earlier.

The oil and gas equipment manufacturing industry already has reported slowing demand for its products due to the oil downturn, according to Wells Fargo.

Statewide, oil and gas accounts for 1.2 percent of total employment, ranking Colorado No. 10 in the nation in terms of percentage of total employment. Colorado’s broader economy remains diverse enough to weather a downturn, but concerns about Weld remain, according to the report.

“If growth in the energy industry dries up, or worse, shifts into reverse, the effects on Weld County will be much harsher than for the state as a whole,” the report states.

Mark Bradley, managing broker at Realtec-Greeley, said he has seen little evidence of the oil price downturn affecting Weld real estate markets.

“We’ve had some commercial transactions that were postponed or killed outright over the last few months when (oil) prices dropped,” he said. “But we’ve had others that went ahead and are going full-steam ahead.”

The oil downturn could affect Weld County’s residential real estate market to a greater extent than in other oil-producing counties in other states, according to a report from Wells Fargo & Co.’s economics group.

The report from Wells Fargo (NYSE: WFC) states that the slowdown will dent the county’s booming housing market and other industries that rely on workers’ rapidly growing incomes. That’s because many of the people who work in Weld also have homes in the county, unlike in remote places in North Dakota and Wyoming, where companies have established temporary housing for workers. Weld County produced 80 percent of the state’s oil…

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