Saturday, June 7, 2008
Gas and oil
Gas and oil prices continue to soar. As a result the prices in the realestate market have continued to slide. The question to be asked is when will it all end? Have we truly entered into a buyers market yet? Many folks are saying that the price of gas has a direct impact as to how they decide on picking a new home. Proximity to the workplace, recreation or their children's school and activities are all factors also taken into consideration because of rising gas prices.
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3 comments:
Mr. Real Estate Pro . . .If there is a direct correlation between gas and oil prices and the real estate, then do you think brighter days might be upon us?
With oil falling more than $23 a barrel since it peak earlier this month, the price of gasoline has finally fallen below its steep $4 plus a gallon price. Another area that looks promising is the natural gas prices, which initially was on the rise with the anticipation of a hot summer, but has taken a turn in the opposite direction falling around 33% since the beginning of the month. However, in the whole scope of things, although crude prices have declined, gasoline is still costly [compare average cost of gasoline a year ago under $3.00 a gallon].
On an aside, should we be concerned about global warming and its affect on the weather trends and ultimately the possible affect on fuel prices. It seems weather trends have been greatly impacted by global warming, this to include hurricanes and tornados which have become more frequent and more intense. One hurricane could wipe out the oil producing regions of the Gulf Coast and once again we will see a rise of fuel prices, and then of course there are the tensions in the Middle East; another price pushing factor.
However some analysts are optimistic that crude oil prices will continue to decline, another factor to consider is the entire American economy and how this impacts the global market. We know that prices have an impact on demand and worldwide impact. Should we continue to hope for the economies of emerging counties such as China and India to start to diminish in order to see oil prices come down.
Mr. Real Estate Pro your question has validity, "when will it end?" This can all be so discouraging, especially to those who have no undertanding of economics and economic cycles. Unfortunately one never knows when one cycle will end, another will begin. The best thing is to remain optimistic.
Hey Luc
It was not overnight that the oil prices increased and the same can be said for the housing industry. All tie together in our economy. As one market slows or speeds so do others. The housing crisis was actually created,not the right word but, by the banks. The banks were giving mortgages to anyone who wanted them even knowing that they were a risk. The banks were using appraisers that they knew would overinflate the property value just to lend the money. They were ignoring the risk signs that many borrowers showed, etc. Then along comes a slow down in the economy and a tremendous increase in oil prices. Keep in mind that All manufactoring indusries and farming etc all use some sort of petrolium based product. As that increases in price and that cost is passed on and the upside down mortgage price are called back you have a huge mess. Just spinning out of control. Then throw in other outside influences, the strength of the euro,the boomong Chinese economy and the demand for oil in those countries and on and on.
I do aggree with the cycle being unknown but there are folks who make millions of dollars out there predicting a slight turn around. I beleive we are going to go down in little more first. As I write this I heard the Goverment is bailing out Freddie and Fannie Mac. Time will tell if this is wise or not.
Bullish move. Great effect. Lower forclosure rates. More mortgage money. Stable Housing market, but might not see this until mid 2009. Things might be looking up.
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