Real Estate values & gas prices.

Mary A. Tinkler - Real Estate Broker
Shattuck & Co. Real Estate, Inc.
Gresham, Oregon
www.marytinkler.com

This is an open forum....your feedback, opinions and ideas are wanted!

You know, with computers making it so easy (and with less risk of going blind reading newspaper charts!)....I started watching the stock market a bit closer a few years ago. Hearing what the Dow Jones was doing on network news really meant very little to me, though I knew it does effect the real estate market to an extent.

But every once in a while I would read a story about a company and I would check to see what their stock prices and history was. Especially insurance companies, utility companies and the like. I would recommend anyone enraged about the price at the pump start watching the profits being pumped into investor's pockets. They blame the ever escalating prices on China, they blame it on the war in Iraq or some other middle eastern countries political stance....and of course our president has recently announced that Americans are addicted to oil, or something like that.

The fact remains Big Oil is making money hand over fist, and I resent it. I don't have anything against capitalism, and I am willing to pay a price that enables any company I buy from to make money. But from what I can see often the prices are manipulated merely by rumors and stock market nervousness.

Yes, the soaring cost of gasoline can and will effect the real estate market. In a number of different ways. Although I think it will take some time and considerably higher gas prices to get Americans out of their cars, and willing to walk even short distances in wet or cold climates. Women will be even less eager, as these days few of us feel safe even walking though a night-time parking lot to get from the grocery store to our cars. And of course we will have to continue ferrying our children to and from school and activities....it's just not safe out there.

Still, some people will sell or buy in order to be closer to their work place. Homes along or near mass transit lines may become more desirable; those more secluded may take longer to sell for less that asking price. Other people may downsize just to pare their budget in order to afford the luxury of an automobile and the gas to run it.
Around my area of Oregon, there are a lot of outlying "country properties"....and though they are not cheap it is true that the further out you go from the city, the cheaper the real estate. And until now there have been families who will make that 3 hr a day commute in order to have a little land and privacy. But that will change. It just won't be cost effective, unless employers are willing to adjust the cost of living....driving....to match the increase in their employees travel to work budget. And how can they do that with fuel prices driving up their cost of doing busness?

As it stands now, two minimum wage earners can barely afford to own a home, at least not in Portland. They could until fairly recently, but there was no room for error, accident, illness or unemployment in their budgets. Now more families with what was considered living wage incomes will find those paychecks not so livable. Gasoline for two vehicles will represent a much larger part of their budget. They will want to be closer to work, they will be able to afford less of a mortgage payment.....less house. They will stay there longer, and when the lower end of housing is not moving, it slows changes the dynamics of the entire market. In time the market will adjust.

The fact is, real estate is still the best investment you can make,and I recommend that IF you can afford some sort of home, or have plans to move for personal reasons, don't put it off. Prices may plateau, or even go down a bit......but interest rates will go up. History shows that, long term, housing prices never really crash. (Unless you happen to live in a one-company town...and that compnay closes.) Buy what you can, when you can, and don't dally.

I read a Rueters story recently about urban areas in California where low income people were pawning household items for pennies on the dollar in order to get gas money to get to work. Now the local Portland TV stations are telling the same story. We may think that has no effect on us, but I think it might. What if one day they just can't afford the gas to get to work to sling burgers or scrub floors.....or pump gas?. What if we all just took a few days off from work and simply stayed home, in protest of gas prices? A nice vacation, no need for gas, we could catch up on yard work, paint the kitchen, read a book. Do you think that would get Big Oils's attention? Do you think the price of gas would come down? Or would Big Oil just sell the gas we didn't use to China?

Whatever you think about the price of gas, whether it strains your budget or not, I believe that sooner rather than later, it can effect the value of your real estate.

Mary A. Tinkler - Real Estate Broker
www.marytinkler.com