Falling Oil Prices Threaten Houston Building Boom Essay - 17

Falling Oil Prices Threaten Houston Building Boom - Essay Example Ideally, unemployment has a direct and indirect impact on other industries since it reduces the earnings and purchasing power of the unemployed. I believe the unemployment derived from the falling oil prices will have detrimental effects on the housing industry especially in Houston (Brown 1). Most of the people fired or prone to firing by energy companies in the U.S come from Houston. Ideally, savings from energy costs would increase consumer spending, create more jobs, and improve earnings that would enable more people to buy homes (Brown 1). As such, the housing industry would benefit indirectly from oil savings. Indeed, reduced oil prices would encourage young buyers to join the housing market thus raising the demand for houses in Houston. However, the continued drop in oil prices and the resultant unemployment changes the above economic dynamics and assumptions. Having flourished in Houston when the energy sector was experiencing immense growth, housing developers in Houston are now feeling the heat of the falling oil prices in America. Indeed, the demand for offices is on a downward trend in Houston subject to the anxiety, uncertainty, and limits derived from the oil prices that have been falling since June 2014 (Brown 1). Developers planned and started many of the buildings in Houston in 2014 when there were high and stable oil prices (Brown 1). Indeed, by the end of last year, construction in many buildings was on an advanced stage raising questions on the uncertain demand for these building units. The housing industry has created many jobs for the builders at building sites and manufacturers in concrete and steel companies. However, the announcement by energy companies to fire about 23,000 employees with a significant number coming from Houston demeans the imminent supply of office units in Houston (Brown 1).