Is $ 5 or $ 10/ Gallon Gasoline Going To Kill Real Estate In Ventura County? Or Any Other Place?

May 25th, 2008 Categories: "Say What? Just Some Real Estate Talk

Gasoline at $ 5 per gallon? You have to be kidding!

What! $ 10 per gallon gasoline…..you must be plain nuts!

Well I was surprise to see gasoline pass the $ 4.00 mark and there is nothing to suggest that it will not go to $ 5. Ten $ may be a stretch but if we don’t get our act together that will be reached in a blink of an eye.

Without going into too much of a discourse there will be a significant impact to spending patterns. I am not talking about not ordering a pizza or anything like that.

And one can take years to address the causes of the fuel price acceleration. The blame game will cover demand, supplies, geopolitical events, speculation, social engineering and in-action in the development of our own resources.

Things are currently underway to undo the situation but time is needed.

The military is testing the conversion of coal to fuel for use on military aircraft, ships, trucks and whatever else is needed for military operations. The United States and China have the largest deposits of coal throughout the world. It will be used.

Do not be surprise to see restricted areas open for drilling. Watch for accelerated spending on nuclear plants and hydrogen applications. Wind mills and the like have limited energy application (especially for automobiles).

So what is the impact to real estate? None. However there will be changes.

There is that old slogan in real estate— ”location”, “location”, and ”location“. This will become extremely important in the short term.

Real estate spending patterns will change from buying in suburbia to buying in metropolitan areas. People will want to live closer to work, shopping and general entertainment activities.

Purchases of new furniture, kitchen items, perhaps remodeling will be put on hold. So this subset of real estate will suffer.

In the short term large cities will start to accommodate real estate buyers with more condos and apartments. Old building will be re-made. Prices will increase because the demand will be higher than supply (sounds like the quandary we have with gasoline).

Areas like Los Angeles have already started this drive and other large cities have been taking baby steps but soon metropolitan areas will be looked at as the place to live.

Such actions will reduce driving, will be close to people’s work, allow people to still do what they want to do but everything will be closer.

As prices increase and as supplies become limited suburbia will be moving into metropolitan areas until the fuel pipeline rights itself.

As with the spike of gas prices in the early 1980’s, things will settle out and as then real estate wherever it is will do well.

For your real estate needs give me a call.

Your comments are welcomed.