Gas prices and economy
Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
Gas prices and economy
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
5yOriginally posted by @John Carbone:
Interest rates are also increasing. Historically every 100 basis points represents a 10 percent move in real estate. What’s the continued bull case? I’m struggling to find them, all I see are headwind after headwind.
And yes, $1 a gallon more is just x more, but at what point does that extra dollar become significant. $2 to $3, $3 to $4, $4-$5 etc, eventually it matters. I think $4 gas pricked the economy last time.
$4 gas in 2007 is a lot different than $4 gas in 2021. My prediction is even $4 gas has virtually no effect on anything regarding tourism. RVers may stay at locations longer; beyond that, even a $2/gallon rise in gas prices only adds $100 to the travel costs of someone driving 1000+ miles round trip, beyond which a lot of people will fly instead of drive.
If you want to worry, of course, then by all means you should enjoy yourself; there's certainly no shortage of news items you could pick on which to feel distressed :)
Skyline Properties
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Originally posted by @JD Martin:
Originally posted by @Bruce Woodruff:
Originally posted by @Ryan Moyer:
To me, only because these people are not getting other, better paying jobs.....they are choosing to not work at all...
This is true, and in my opinion it's a dangerous mindset all the way around and also demonstrates why setting a reasonable floor for things like minimum wages that adjust with inflation isn't a bad idea. There are a lot of workers in these service industries that are doing just that - deciding they'd rather live in the hustle economy + a few government benefits than go back to work at all, even for much higher wages. That's well and good but business and marketplaces virtually always find a way to adjust to new realities. For example, someone mentioned optional linens. Seating yourself instead of having a hostess. Getting your own drinks. ETC. Once businesses discover ways in which they can still stay in business, still be profitable, and do it with a much smaller staff, that is going to be the new normal - so when a lot of these people fizzle out in the hustle/gig economy, they're going to find out that there's no job to go back to. That's going to leave a lot of disgruntled people walking around with no jobs and no prospects, demanding money and support from governments that are already bleeding.
In Saudi Arabia & Iran, just to name two, the governments, propped up by oil money, have huge unemployment system benefits aimed at young people (under 35) because of their massive, permanent unemployment levels in a demographic that, if it's not working, is getting into trouble and fomenting revolution. It would be a mistake to think the same type of thing couldn't happen here. A smart government intervenes in the marketplace enough to ensure fair competition and access and keeping a reasonable balance at both ends and nothing more. Total government control of the economy and total laissez-faire policies are both disastrous. Now you've got a strong support for $15 minimum wages, which means virtually nothing as a lot these jobs can't find takers at $20. I saw some advertisements locally at Chik-Fil-A for line workers for almost $19/hr. There's a huge rejection of work at the bottom end, spurred on by the pandemic and associated government benefits, and when the dust clears a lot of these jobs are going to be permanently gone and these former workers will be in serious trouble.
I agree with the above, but the interesting thing is that we are also having trouble filling six figure jobs. Right now trying to fill two positions, one is hourly at $80/hour and the other is a salary position which including expected bonus will approach the quarter million dollar range in 2022. We have not gotten many applicants. These aren't high level positions either. They both require maybe 3 and 7 years experience in accounting. Before the pandemic, we would have gotten hundreds of resumes for jobs like these. Not so much anymore.
- Investor · Thousand Oaks, CA · Member since 2017 · 306 posts · 123 votes5yWe are applying for the new California Rebates on Adding Electric vehicle Charging to our Garages this attracts higher-income tenants and solves the old Gas problem as it cost a tenant only $3 per day for a 300-mile charge lots of Tesla owners are happy to pay and extra $50 in rent to have the circuits already installed. a tenant with a large gas-guzzling truck that costs them $120 to fill up twice a week will not likely be able to afford the rent. plus with the new $8,000 Rebate on buying an Electric Vehicle, i only want upwardly mobile tenants. https://www.sce.com/evbusiness...
- Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes5y
@John Carbone Also keep in mind that real estate prices are sticky. Folks tend not to sell if they will take a loss. But if they lose their job too then that is a different matter. Unemployment is very low. 1970s stagflation was brought up. During that time frame real estate prices rose. Real estate has proven to be a great inflation hedge. Will gas prices affect short term rentals if nothing else changes? Sure it will. Increasing gas prices will eat into disposable income and there will be less vacations. But the economy is not one sided and other things happen all the time. Wages are increasing. Unions are getting bolder. Income is increasing. The question is will wages increase at a faster pace than gas prices or other consumer products? If yes then short term rentals is a good bet in vacation areas. In Austin metro str is in strong demand due to the growth.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
A big factor is all the stimulus money. My tenants purchased a new RV during COVID. It cost $11,000 and she told me that she "saved up money". I know for a fact that her family received $11,500 worth of stimulus money and neither her or her husband had loss of income, so that was all extra income. On top of that she deferred her car payment and student loan payments. Her kids get free lunch and she qualified for temporary SNAP. In other words, her savings were the result of a one time stimulus, government handouts and payment deferral event. Now they have a camper that costs them money to use, so their ongoing expenses have increased. How many other people are in the exact same situation?
The same thing happened with home renovation, new cars, new furniture. This inflation is partially or even mostly being driven by government money, so what happens when the music stops and everyone runs for a chair?
Most people predict the future based on the recent past. That is why nobody was buying real estate after the real estate crash, even though it was the best time to buy. That is why everyone is buying real estate right now, even though the market is riding higher than ever.
Of course keep in mind, even during a crash of any market, there are those that profit and do well. A crash mostly just "thins the herd" and the weaker businesses are weeded out. The strong businesses come out even stronger.
- Investor · Thousand Oaks, CA · Member since 2017 · 306 posts · 123 votes5yIn our area, we had a labor shortage since 2014 of both low skilled jobs like Farmworkers many now can make $18/hr picking Avocados and High skilled workforce people with advanced degrees. Large biotech companies like Amgen had to stop hiring in 2016 since no new PHDs wanted to move to the US and our Education system was not producing them fast enough. Low skilled migrant workers also fled or were turned away at the border so our Farms have had to Automate. one Strawberry picking Machine can now do the work of 10 workers using Computer Vision. Workers know lots of employers will pay $18/hr like Starbucks and Amazon plus they pay college tuition to attract workers so old jobs go unfilled. Many learned to trade Crypto online day trading so we've seen lots who would return to old jobs. almost all of my tenants have doubled their income by changing jobs. No one was ever even late during this Pandemic for us and for renters who needed help the State of California offered to reimburse all landlords who worked with the Tenants 100%. Restaurants now must pay much higher wages as Australia does. $25/hr is not uncommon. We've also received new SB9 and SB10 permits to add ADU onto existing properties so we can increase our rental density and income by 20%. GDP will likely double in the next 3 years, With 40,000 new Amazon employees now Millionaires and 10,000 Tesla employees now millionaires Appreciation and rants will all rise. people, we talk to all plan on dumping Gas cars, especially with the federal and state rebates to buy electric. So Gas will not slow down our economy much. We have an Oil glut now the price increases are just to make the same profits oil companies are used to.
- Rental Property Investor · Waterville, ME · Member since 2018 · 36 posts · 19 votes5y
@John Underwood
Go electric and they are already trying to get you with pay per mile. Lol
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes5y
Originally posted by @Ian Walsh:
I wonder what happens if gas hits that number that shuts down trucking companies during a supply chain crisis? We are sitting on a house of cards at the moment.
When truckers get pissed enough and park the trucks , the economy comes to a standstill . It happened in 1973 into 1974 . It will again
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