Hey Everyone! This is Cole Oraham here with Focus Realty. I read an article earlier this week and wanted to share a key takeaway that most people aren’t talking about right now. I’m sure that you have seen the meme going around on Facebook that $5 is gas money again. It’s right. Gas prices are extremely low! There is a group called OPEC who was planning on reducing the production of oil. The reason being is that they wanted to keep oil prices profitable due to a decrease in demand because of the coronavirus. Russia at the last second decided they did not want to sign the OPEC agreement, so that irritated Saudi Arabia. They then got into a production battle. The increase in supply and extreme decrease in demand with the lack of travel is what is causing the prices to plummet. Here’s how that will trickle down to the real estate industry
The US is the largest producer of oil in the world.
There are a lot of states and markets that have workforces that rely on the oil industry.
If prices drop then the oil companies will have to lay off workers in order to stay afloat.
If those workers are laid off then it is highly likely that they will default on their mortgages or have to move to find other work.
If they default around the same time then there will be a large supply of houses coming on the market at once.
Again, due to supply and demand that will cause housing prices to decrease.
This will be particularly heavy in rural areas and small towns. Large metro areas have a lot of other sectors that could absorb the workforce.
Fortunately, this should not have an affect on real estate here in the Upstate of South Carolina. I wanted to provide a macro view for everyone. In the comment section I will be posting a link to view the original article that dives much more in depth. As always, if you know someone who is interested in buying or selling a property then I would love the chance to help them out. Until next time! Thanks for watching!
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