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How Cheap Gas Helps the Real Estate Market

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The price for gas has fallen to a national average of $1.67. This decline at the pump is less than half of what gas cost in July.

As prices have declined nationally, what does that do for real estate? People tend to spend more when they view themselves as being worth more, also know as the Wealth Effect. This increase in wealth should lead to higher levels of consumer spending, which is why consumer confidence rose in November.

This is important to the real estate market because as people view themselves as wealthier and gain more confidence in the economy, major purchasing such as homes will increase. Also helping the market are mortgage rates at 3 year lows.

Image source: GasBuddy.com

Posted by Darrell Walters on 12/23/2008 08:49 AM

Comments (8)

Consumer Spending in the Mortgage / Finance Channel

consumer spending, gas prices

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8 Comments on How Cheap Gas Helps the Real Estate Market

DEC

Also, people HAVE more money because it is not all going in the tank

Darrell,

Lower gas prices does help people feel that they are little better off than they were 6 months ago even if nothing else changed. :)

Steve

The gas price no doubt have a positive effect and we need all the help we can get. The mortgage rate will also help juice the economy. Hopefully over the next couple of years we will be back on track.

It also helps lower my operating costs, I love that it now only cost me $30 to fill my tank.

The lower prices helps all in these times and does make a big difference in the pocket money we all have at the end of the week.

Hi Darrell,

Lower gas makes me feel better, that is for sure. I imagine it has the same effect on my clients too. The Holidays are a bit slow around here, but January should roll in pretty busy - I hope. Right now our crazy sub zero frozen tundra weather is doing more damage then gas prices. Once the weather clears out (but this is Montana) - hopefully by January - lower gas prices should really help a lot. Great post.

Thanks

Kelly

As a home inspector, gas is a significant overhead in my business. Unfortunately, gas hit a low here of $1.559 last Wednesday and has zoomed back up to $1.749 today.

Best wishes for health, happiness, peace, and prosperity in 2009.

DEC

There are four gas stations within a block of me. They range in price from $1.75 to $2.00 for the least expensive gas, up about 20 cents from last Wednesday. I predict $4 gas in five months when tourist season starts, if not before if Obama's economic recovery instills confidence in everyone.

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