Gas Prices Throw a Wrench in Housing Rebound

By Gino Blefari

President & CEO

Intero Real Estate Services, Inc.

It's looking more and more like the rebound in housing markets across the country won't rear its head until 2012. At the end of last year, many folks expected more slow and steady recovery in 2011, but even that seems optimistic.

Why? A few reasons, of course. But the biggest and easiest scapegoat right now is gas.

Have you visited the pump lately? Each week, the cost of filling up is rising so fast you think your final price must be a mistake. That's not for my car, you think. But it is.

Historically, the price of gas is a serious enough issue for many Americans to cause a chain reaction of paralysis on consumer spending. It starts with the trade-offs like less eating out and shopping, then seeps into small changes like fewer car trips and different commuting habits, then onto downsizing – smaller, more fuel-efficient cars. Then finally, it gets into our heads.

And when it gets into our heads, we start to feel uncertain about the economic future (as if we weren't there already). This very psychology is enough to derail major purchasing decisions like buying a house or car, or making risky but beneficial moves with your business or career.

The other thing to think about with gas prices and the effect on housing is location. In many parts of the country, your car is your only means of travel. If we continue to see climbs in gas prices and sustained high prices like some are anticipating, then eventually this will start to impact how we think about where to live.

Suddenly, the "Can I live here?" question includes a lot more considerations.

As we move through the market this year, we had expected some obstacles thrown in from a new lending atmosphere and congressional attempts to regulate. We expected slow growth due to a slow job market. But did we stop to think about something as seemingly unrelated as the price of gasoline? Maybe not. But now it's time to realize how these things affect everything around us – big and small. And housing is definitely one of them.