Houston economy takes hit from falling oil prices

HOUSTON (KTRK) -- As oil prices drop to $27 dollars per barrel, Houstonians know what that means for the local economy.

"I think there's a tradeoff, you know," Ali Motamedi said "You have people losing their jobs or not having as much robust economic growth, will hurt the housing industry here, the tourism here, the construction industry. It's not just the oil industry that gets affected by it."

Real estate agent Jennifer Erwing said the housing market is still in good shape because there's so much of a demand for property inside the loop. However, she is starting to see some hesitation among certain buyers.

"We have people with high net worth, and their portfolios have taken a dive," Erwing said, "So they're a little more conservative. But in terms of closing properties, we're seeing a huge demand."

CNN reports that tight inventory has been the leading cause of rising home prices across the nation, so the lack of supply could keep home prices from falling too much too fast, if energy prices continue to drop.

Dr. Stephen Klineberg is keeping a close eye on Houston's changing landscape through is studies at Rice University.

"This is a serious blow for Houston," Klineberg said.

He said Houston can handle dropping oil prices much better now than it could back in the '80s.

"Eighty-two percent of all the jobs were tied to oil back in 1980," Klineberg said, "Today, about 45 percent of all the jobs in Houston, are tied to oil, still very, very important."

Klineberg said Houston is well-positioned to adapt to a changing economy.

"Today, there's no reason for panic," Klineberg said, "There's reason for some concern. There's a recognition that our energy systems are in the midst of fundamental transition."

Longtime Houstonians are confident their city will overcome this.