Midland/Odessa Operators Still Cutting Rents
Among the nation’s largest 150 apartment markets, Midland/Odessa is the only one still logging rent cuts. As of August, effective asking prices were cut by 1.9% year-over-year in the Permian Basin. While these cuts were the market’s most shallow seen since June 2019, it’s surprising to see rents being slashed at all in the current rental climate. In the U.S. overall, annual price increases hit an all-time high of 10.3% in August. Texas markets in general have not been leading the pack for rent growth in recent months, but even the underperformers are raising rents by 4% or more. Midland/Odessa’s pricing struggles run deeper than just the COVID-19 pandemic downturn of 2020. This market relies heavily on an energy-dependent economy, which operates in a boom/bust cycle. Crude oil prices hit a peak in 2018 before falling notably in 2019, triggering rent cuts in Midland/Odessa. By April 2020, crude oil prices fell into negative territory for the first time in history in the throes of the COVID-19 pandemic. Midland/Odessa rent cuts bottomed out at a steep 31.8% in October 2020 before rebounding to more reasonable levels.