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Leanan
News Editor
Joined: May 20, 2004
Posts: 4582
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 Posted: Sat Jun 25, 2005 9:57 am Post subject: Higher oil prices good for housing? |
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Yes, says MSNBC:
http://www.msnbc.msn.com/id/8348136/
I'm not sure this is good news. I have a feeling that postponing the inevitable snapback will only make it worse. |
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MicroHydro
Light Sweet Crude
Joined: Apr 10, 2005
Posts: 1286
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| Posted: Sat Jun 25, 2005 11:31 am Post subject: |
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Yeah, right. How about the recent buyer of a home in an exurb who has to commute 100km to work to a job in a business that is itself dependent on cheap oil?
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smiley
Fission
Joined: Apr 16, 2004
Posts: 2146
Location: Europe
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| Posted: Sat Jun 25, 2005 4:19 pm Post subject: |
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It seems to be part of the good news show which has been running for the past few months. Some of the things I've heard in the past few months:
- An economic slowdown is good because it drives interest rates down.
- A high oil price is good because it drives the stocks of oil companies up.
- A large trade deficit is good because it means consumption and spending are strong
- A flattening yield curve is a sign of economic strength.
- A weak currency is good for the economy.
No matter how bad the news is, if you look hard enough you will be able to find some obscure "analyst" who knows how to twist it into "good" news in return for his five minutes of fame. |
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Novus
Light Sweet Crude
Joined: Jun 21, 2005
Posts: 1750
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| Posted: Sat Jun 25, 2005 5:46 pm Post subject: Peak oil Good for condos Bad for single family homes. |
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Higher oil prices will cause inflation and raise interest rates which will hurt the housing market overall but there will be both winners and losers in the new market. High density condos near public transportation will likely increase in value as oil and gas prices go higher. The low density single family homes and sprall will likely go down in value as oil goes up. When life centered around cars and long commutes comes to an end high density walkable communities will become a nessisity while suburbia turns into the ghettos of the future.
The Documentary "The End of Suburbia" goes into this in great detail as does the book "Dark Age Ahead" by: Jane Jacobs. |
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smiley
Fission
Joined: Apr 16, 2004
Posts: 2146
Location: Europe
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| Posted: Sat Jun 25, 2005 6:14 pm Post subject: |
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| Quote: | | Higher oil prices will cause inflation and raise interest rates which will hurt the housing market overall but there will be both winners and losers in the new market. High density condos near public transportation will likely increase in value as oil and gas prices go higher. The low density single family homes and sprall will likely go down in value as oil goes up. When life centered around cars and long commutes comes to an end high density walkable communities will become a nessisity while suburbia turns into the ghettos of the future. |
The reasoning is sound, I do believe that we will see a move to the cities. However does it necessarily mean that the housing prices will go down.
Inflation is currently running at an estimated 6-8 percent. That means that the dollar will have one tenth of is purchasing power in 12 to 15 years. Then a suburban home must loose over 90% of its perceived value in order to drop in price. If inflation is high enough we will only see a slowdown in the growth, not a drop. |
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chris-h
Heavy Crude
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Joined: Oct 11, 2004
Posts: 447
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| Posted: Sun Jun 26, 2005 2:07 am Post subject: |
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| smiley wrote: |
Inflation is currently running at an estimated 6-8 percent. That means that the dollar will have one tenth of is purchasing power in 12 to 15 years. Then a suburban home must loose over 90% of its perceived value in order to drop in price. If inflation is high enough we will only see a slowdown in the growth, not a drop. |
You mean in phony growth not true growth.
real growth = growth of economy minus inflation.
If gov says that inflation is 2% while true inflation is 7% and that growth is 5% then true growth is
5-7+2 =ZERO percent.
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Start preparing now. |
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pea-jay
Light Sweet Crude
Joined: Jul 17, 2004
Posts: 1600
Location: NorCal
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| Posted: Sun Jun 26, 2005 2:29 am Post subject: |
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Martin Wolk's columns are usually pretty reasonable to read. Unfortunately he still is a conventional economist and unaware of the true oil predictament or unable to fully comprehend it.
Oil will absolutely burst the bubble (unless it pops on its own inflated accord). How can people to continue to afford ever increasing costs and continue to pay their mortgage?
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I_Like_Plants
Fusion
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Joined: Jun 12, 2005
Posts: 4189
Location: 1st territorial capitol of AZ
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| Posted: Sun Jun 26, 2005 2:57 am Post subject: |
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Eurgh, it's like saying the Great Depression was great for housing because the cost of houses went down, and look at all the new Hoovervilles that were built!
Let's say we have a real crash, most ppl out of work, there will be plenty of construction but it will be by people themselves or their neighbors on a barter basis. And the contruction will be retrofitting current, energy-hog houses into more effecient designs, subdividing parts into sub-rooms that can be kept warm and walling off other parts to use as unheated storage. And doing various things for passive cooling for summer. |
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