Do High Oil Prices affect real estate?

I always seem to choose the most expensive times to take a road trip.  This last week, we did a jaunt around West Texas and unfortunately, we were paying around $5.25/gallon of diesel at every stop .

This I’m sure is no surprise to you.  The war in Iran has caused big oil price spikes which hits us first at the pump.

But you’re wondering - our real estate market has actually seen a little uptick this spring.  How will this oil stuff affect it?

The biggest thing is, everything just costs more.  The cost to transport supplies goes up (did you see jet fuel more than doubled in price?).  The cost to produce supplies goes up (did you know that much of what goes into building is petroleum based, like your roof, anything plastic, the roads?).

And clearly, this isn’t just for real estate.  The costs to produce ANYTHING goes up.  Which leads to higher prices.  In economist speak, that’s inflation.  And when we have (even just the risk) of inflation, interest rates tend to lean higher 😢.

It can get even tricker when prices go up, but demand doesn’t.

But hey, the bright side is, so far it hasn’t been that long.  If everything were to reverse quickly, this might be nothing more than a blip when we look back.  Also, understand that economy is complex, and factors affect each other in ways that can be very hard to predict.

My personal philosophy is to prepare for the worst and anything other than that is a bonus.  If you have any questions about real estate, just reply and let me know what you’re thinking.