COMMENT OF THE DAY: THE CUSHION DEFLATES “Houston’s economy has diversified since the 80’s, but we’re still largely an oil & gas town. High energy prices ($145/barrel last summer) kept a lot of cash pumping into the Houston economy and cushioned us from much of the RE downturn faced by the rest of the country. At the same time, plant expansions and engineering contracts (refineries, chem plants, etc) were also experiencing record upswings and that boom has dropped significantly over the last 6 mos. The big cushion factors to our local RE market, oil/gas/petrochem have all dwindled down significantly, and that drop has occurred only recently. I seriously doubt the impact of those downturns underpinning our local economy has been priced into the Houston RE market to any significant extent. RE problems will not be limited to subprime loans by any stretch IMO.” [Mook, commenting on Those Wet and Wild Houston Mortgages: 18 Percent Now Underwater, 7 Percent More Still Paddling for Air]