Real Estate Investing Basics

Fuels Costs, High Gas Prices and the Real Estate Investor

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13 Articles Written
Fuel prices are already taking a huge slice out of family budgets with soaring heating and energy cost; but thats only the beginning. As gas prices skyrocket, the money to buy it must come from the family budget, making it even harder to keep up with the bills and the mortgage payments. When many homeowners [...] View the full article: Fuels Costs, High Gas Prices and the Real Estate Investor on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

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    Rehab702
    Replied over 11 years ago
    Excellent article! People had been calling for the Fed to cut rates and they got their wish. However, it was a classic case of “be careful what you wish for.” Lowering the interest rates caused an already weak dollar to fall even further. This increases the cost of imported goods to rise. Our largest import is oil and we can see the results at the pump and in the price of everything that needs oil in its production or shipping. The Government’s ill conceived ethanol program is also causing a shortage of corn which, in turn, is causing a rise in things such as beef which rely on corn for feed. Interesting times indeed. As you point out, we may see a movement back to the inner city areas, which could create great investment opportunities.
    Joshua Dorkin
    Replied over 11 years ago
    As Richard said, I also think that high fuel costs will lead to a migration from the burbs back to the cities, which should certainly lead to renewed opportunities. I regularly hear about people trying to move closer to their work thanks to the high cost of gas. Nice article!
    Michael Creel
    Replied over 11 years ago
    You will certainly see that happening in areas that lack mass transent systems such as subways. Three years ago homes were selling like hotcakes in areas out in the middle of nowhere, now those homes are on the market and no one is buying. Downtown condos are the hot investment in our city currently. I wouldn’t mind having one myself.
    Michael Creel
    Replied over 11 years ago
    You will certainly see that happening in areas that lack mass transent systems such as subways. Three years ago homes were selling like hotcakes in areas out in the middle of nowhere, now those homes are on the market and no one is buying. Downtown condos are the hot investment in our city currently. I wouldn’t mind having one myself.
    Chris Heath
    Replied over 11 years ago
    Certainly a good article. Here in Thailand new condominiums that are being built will increase in construction costs by 15%, which may mean a good time to buy finished second hand units which dont have this premium.
    Chris Heath
    Replied over 11 years ago
    Certainly a good article. Here in Thailand new condominiums that are being built will increase in construction costs by 15%, which may mean a good time to buy finished second hand units which dont have this premium.
    Alec Bobdon
    Replied over 11 years ago
    As fuel prices continue to increase, prices of property that is very near to public transport systems (trains, trams etc.) should also increase in price.
    Alec Bobdon
    Replied over 11 years ago
    I think construction costs in Thailand will continue to increase by at least 10% p.a. for the next 5 years.
    Alec Bobdon
    Replied over 11 years ago
    I think construction costs in Thailand will continue to increase by at least 10% p.a. for the next 5 years.
    Michael Creel
    Replied over 11 years ago
    Property prices have already begun to increase around public transportation hubs. As oil prices climb, construction cost will also climb, and thats true for all countries. It’s also affecting the cost of consumer goods. Reply Report comment
    Michael Creel
    Replied over 11 years ago
    Property prices have already begun to increase around public transportation hubs. As oil prices climb, construction cost will also climb, and thats true for all countries. It’s also affecting the cost of consumer goods.
    ideal4investors
    Replied over 11 years ago
    I think more employers should allow their workers to telecommute when possible. Not only will it save gas money, tax dollars that would be spent on road construction or public transportation, and the environment, but many workers can regain hours of their life they spend sitting in their cars! Reply Report comment
    ideal4investors
    Replied over 11 years ago
    I think more employers should allow their workers to telecommute when possible. Not only will it save gas money, tax dollars that would be spent on road construction or public transportation, and the environment, but many workers can regain hours of their life they spend sitting in their cars! Reply Report comment
    ideal4investors
    Replied over 11 years ago
    I think more employers should allow their workers to telecommute when possible. Not only will it save gas money, tax dollars that would be spent on road construction or public transportation, and the environment, but many workers can regain hours of their life they spend sitting in their cars!
    Lyn Smith
    Replied over 11 years ago
    Gas prices are still very low in US when compared to the UK, which is around $2.00 per litre.
    Clifton Pape
    Replied over 11 years ago
    Your investment advice is sound within this article. However, your economic assumptions leave a little to desire and need clarity. As an economist the word “shock at the fuel pump” is a bit of an overstatement. A shock is an exogenous change in an economic relationship that causes either aggregate demand or aggregate supply to shift. These shifts happen immediately and suddenly that can wreak havoc on a given market. There is no “shock at the gas pump”. Yes people are talking about the price of gas because the media needs a story and at present, gas is their story! However, the very fact that people are constantly talking about “gas” means that there is no shock in gas prices. Remember shock can only occur if there is a sudden and immediate change in a market that is unexpected. Now let’s say that several refineries are shut down off of the Gulf of Mexico due to a hurricane. That would justify a “shock” and would greatly affect people at the pump because overnight gas prices could jump to eight dollars a gallon! So how is gas affecting people? People’s behavior is geared toward rising gases prices; therefore, they are already adapting to the rising cost gas whether they realize it or not, which greatly reduces the economic impact of their change. So are businesses and in particular, construction companies where building material prices are dropping due to a drop in demand for building materials. If someone states that fuel is driving up construction cost they are greatly mistaken! With regard to your investment suggestions they are great! However, they have to do primarily with micro-economic factors rather than the macro-economic factors you mentioned in your post.
    Clifton Pape
    Replied over 11 years ago
    Your investment advice is sound within this article. However, your economic assumptions leave a little to desire and need clarity. As an economist the word “shock at the fuel pump” is a bit of an overstatement. A shock is an exogenous change in an economic relationship that causes either aggregate demand or aggregate supply to shift. These shifts happen immediately and suddenly that can wreak havoc on a given market. There is no “shock at the gas pump”. Yes people are talking about the price of gas because the media needs a story and at present, gas is their story! However, the very fact that people are constantly talking about “gas” means that there is no shock in gas prices. Remember shock can only occur if there is a sudden and immediate change in a market that is unexpected. Now let’s say that several refineries are shut down off of the Gulf of Mexico due to a hurricane. That would justify a “shock” and would greatly affect people at the pump because overnight gas prices could jump to eight dollars a gallon! So how is gas affecting people? People’s behavior is geared toward rising gases prices; therefore, they are already adapting to the rising cost gas whether they realize it or not, which greatly reduces the economic impact of their change. So are businesses and in particular, construction companies where building material prices are dropping due to a drop in demand for building materials. If someone states that fuel is driving up construction cost they are greatly mistaken! With regard to your investment suggestions they are great! However, they have to do primarily with micro-economic factors rather than the macro-economic factors you mentioned in your post.
    Michael Creel
    Replied over 11 years ago
    “people are talking about the price of gas because the media needs a story” I think people are talking about the price of gas simply because they’re disgusted with the amount of money that’s being extorted from them at the pump. It shouldn’t take the majority of a one hundred dollar bill to fill your tank up. The citizens are being bled dry by the oil companies and the government sits and watches, and thats wrong. Truck drivers can’t afford to deliver goods at the prices they’re paying in fuel. As for the shock part, you point is noted. Thanks for the comment. Reply Report comment
    Michael Creel
    Replied over 11 years ago
    “people are talking about the price of gas because the media needs a story” I think people are talking about the price of gas simply because they’re disgusted with the amount of money that’s being extorted from them at the pump. It shouldn’t take the majority of a one hundred dollar bill to fill your tank up. The citizens are being bled dry by the oil companies and the government sits and watches, and thats wrong. Truck drivers can’t afford to deliver goods at the prices they’re paying in fuel. As for the shock part, you point is noted. Thanks for the comment. Reply Report comment
    Michael Creel
    Replied over 11 years ago
    “people are talking about the price of gas because the media needs a story” I think people are talking about the price of gas simply because they’re disgusted with the amount of money that’s being extorted from them at the pump. It shouldn’t take the majority of a one hundred dollar bill to fill your tank up. The citizens are being bled dry by the oil companies and the government sits and watches, and thats wrong. Truck drivers can’t afford to deliver goods at the prices they’re paying in fuel. As for the shock part, you point is noted. Thanks for the comment.
    Peter Bland
    Replied over 11 years ago
    Yes, oil prices are going to go up and up and up and it’s difficult to image how serious the imact will be, but my instinct is telling me that it’s going to be verrry serious.
    Mona
    Replied about 11 years ago
    You haven’t Russia near your borders! And nobody blackmails you. Our prices depend on it mood