Greetings From McCourt Property Management,

I want to give you a comprehensive update on current market conditions; what we are seeing, why it is happening, and what could cause it to change. If you are short on time, feel free to just check the highlights.

Where We Are Today

At present, February 24, 2026, there are 153 homes available for lease in our market. Last year at this time, there were only 76. Rental inventory has essentially doubled, which naturally creates more competition and longer marketing times.

Home sales have also slowed. Although interest rates are somewhat lower than last fall, they remain higher relative to historical lows. When homes do not sell quickly, many owners and builders convert them to rentals rather than reduce pricing further. That additional supply flows directly into the rental market.

In addition, our area has absorbed a meaningful amount of new housing over the past few years:

  • Several large apartment communities delivered 1,496 new units just this past year.
  • Thousands of new single-family homes have been completed in recent years, and in many cases, builders have converted unsold inventory into rentals.

Why It Feels Slower

Midland’s economy is directly tied to energy. Oil is currently around $66 per barrel, roughly $9 lower than this time last year, and has recently traded in the high-50s. While far from the 2020 collapse, the pricing uncertainty last fall influenced corporate behavior.

There was a great deal of discussion last fall that oil prices might fall to $47 per barrel in 2026 and 2027. So as major oil companies finalized their 2026 capital expenditure budgets, many adopted conservative price assumptions and scaled back expansion plans. Already, technological efficiencies allow companies to produce more with fewer rigs. Chevron ran 21 rigs and five frack crews in 2019. This year, it expects to operate only six rigs and two frack crews while producing 67% more oil and gas. These major companies now drill wells that extend over 4 miles, allowing them to recover more crude with fewer rigs and lower costs. However, many horizontal wells decline rapidly, so new wells must be drilled. (smile) The Permian Basin delivers roughly half the country’s crude at 6.72 million barrels per day and is estimated to have the largest oil reserve in the world, possibly excepting Venezuela, which is unlikely to see fully restored, robust production for several years.

The current Permian Basin rig count is 244, down 19% from 301 last year. For additional perspective, in late 2019 there were roughly 405 rigs. Today’s activity level represents approximately 40% fewer rigs than during that pre-pandemic expansion cycle.

Hotel occupancy declined 5.6% year-over-year, according to CoStar (latest available data). Midland County unemployment remains low at 2.9%, while Odessa's is 3.5%.

We aren’t seeing mass layoffs. What we are seeing is slower hiring and reduced growth. When expansion pauses, even without a downturn, housing demand softens. Fewer relocations, fewer inbound workers, fewer “move up” buyers or apartment dwellers moving up to rental homes, and more cautious corporate spending all reduce leasing momentum.

What Could Shift Conditions

Because energy drives our local economy, changes in oil pricing can quickly alter housing demand. On a broader front, any disruption, or even credible threat of real disruption, in the Strait of Hormuz would likely cause an immediate spike in WTI crude prices. Roughly one-fifth of the world’s oil supply passes through this narrow chokepoint, so markets react swiftly to instability. Even short-lived tensions can move prices as traders factor in risk and geopolitical uncertainty.

Garrett Golding, assistant vice president for energy programs at the Federal Reserve Bank of Dallas, said that: “Data centers could be a tailwind for oil and gas. Right now, the quickest way to get power is solar and battery storage. But when you need power 24/7, all roads lead to natural gas.” We are seeing big data centers shift from focusing on locations near fiber networks to locations near energy sources. “That’s drawing them to Texas; that’s drawing them to West Texas.”

Of course, an upward move in oil pricing would positively affect hiring, relocations, housing demand, and ultimately property values.

Strategic Pricing Guidance

Because competition is higher, the pricing strategy is more important than ever.

We are seeing homes for lease staying on the market longer than is customary. The strongest exposure for any listing, rental, or sale occurs within the first one to two weeks. That is when new listing alerts are triggered and when active tenants and buyers are watching most closely.

If a property is priced too high initially, we lose that early momentum. Later price reductions rarely generate the same level of interest as correct pricing from day one. An extended vacancy often costs more than a strategic early adjustment. For rentals, we recommend adjusting rent earlier rather than later if activity is soft.

The same principle applies to sales. I would not recommend selling in the current environment unless necessary, because you would miss profits when the market is flush. If you choose to sell, pricing must be based on the most recent closed sales, preferably in the past 30–45 days. Comparables from six months ago are not reflective of today’s market conditions. Buyers are making decisions based on today’s market, not last season’s highs.

Bottom Line

We are in a competitive, somewhat supply-heavy environment. This is part of a cycle. Employment remains relatively stable, oil pricing is workable, and we are not seeing widespread distress. However, more inventory requires disciplined pricing and strategic positioning. This market may also create opportunities for owners who can expand their portfolios while inventory is elevated and competition among sellers is higher.

We are closely monitoring oil pricing trends, corporate capital spending, local inventory, and leasing absorption. As conditions shift, we will continue adjusting our strategy to position your property for stability in the short term and strength over time, while keeping you informed along the way.

As always, our focus remains on protecting your investment and preserving its long-term performance. Hope you have a lovely week!

Caren McCourt-Crane