Tracking Fracking: A Study of the Effect of Hydraulic Fracturing On Housing Prices in Texas

Abstract

The past decade has seen volatile shifts in the oil and gas market. Oil prices have ranged from $120 a barrel to under $40 a barrel, which has in turn caused many parts of the Texas economy to change drastically in order to adjust. This paper examines how housing prices in Texas have been influenced by the dramatic increase in oil and gas activity due to innovations in hydraulic fracturing. After examining how oil and gas prices, production, and number of wellheads affect the housing prices in Texas at a county level, the data showed that the number of well heads increases housing prices in the year of their implementation. However, after a year of activity, housing prices tend to drop in counties where there was an increase in the number of wells a year prior. The effects were modest for all variables but tended towards a positive correlation, especially when oil and not natural gas was involved.