As gas prices go up, house prices go down. Buyer's have less money left over to dedicate to mortgage payments. Therefore they have to pay less for houses.
More owners will fall behind on mortgage payments, which will increase foreclosures and short sales, further fueling the downward spiral of market values.
Homeowners who budgeted only $2.00 per gallon and still have to drive to work and bus the kids around can find themselves in trouble in a hurry.
Gas prices impact the price of any product that requires delivery by any means of transportation. Those price increases again take away from borrower's ability to make mortgage payments.
Less purchasing power means less commerce which leads to more layoffs which causes more foreclosures.
Solving the energy policy problems is beyond the scope and ability of this real estate blogger. Helping homeowners who find themselves behind on payments because of gasoline prices, is not.
If these gas prices are breaking your mortgage payment budget in Louisville, please call me to discuss foreclosure avoidance options.
Pictures taken March 2, 2011 in Louisville, KY.