Repeatedly I am asked what my thoughts are about the implications of the situation in Iraq as it relates to the U.S. economy and the real estate market. While I nor anyone has a crystal ball, I do believe that there are certain logical implications that we can extrapolate from the Iraq crisis.
Specifically, it appears with energy prices spiking that there will be an interruption in the supply of oil from Iraq for the foreseeable future. Of course, the oil companies will use any excuse to drive up the price of oil and thus it is logical to anticipate that we will see a spike in gasoline prices shortly.
When oil and gasoline prices rise, a number of things happen beyond the pump.
Those people who are on fixed incomes or have tight economic budgets begin to cut back on certain discretionary items. They may go out to eat less and/or they will make one less trip to the grocery store in order to save a little money. Thus, those real estate markets that are hypersensitive to any adjustment in disposable income such as 80 percent of the residential market will likely be the first markets to have an alteration in the pricing structure due to increased oil prices. Sustained increased prices at the gas pump are effectively a form of anti-inflation. In fact at times when the economy was heating up too much at the beginning of the millennium the government would want oil prices to go up in order to prevent the economy from overheating.
Now, of course, as we are not in a period of inflation anything that harms the economy can cause deflation in the economy. When money is syphoned out of the economy with increased oil prices, there is less money to spend on other items thus reducing demand in some circumstances.
Waging a war on high-end real estate
Of course, the high-end part of the real estate market will likely not be affected by any increase in oil prices because it is not as vulnerable to these small calibrations in the economy compared to the wealth that such individuals may possess. So if you are trying to read the tea leaves it is likely that we will see some changes in a downward or sideways movement as it relates to lower income and middle income housing and very little impact on the higher-end markets.
U.S. energy arena soars
So as the Middle East erupts; U.S. is on the alternative energy front. Naturally, of course, there is always a silver lining in these situations. We live in a global oil market so as oil prices increase the desire to pursue alternative energy whether it is wind, solar, natural gas or even fracking will increase. U.S. output in oil has soared because we’ve adopted new technologies at a fairly good clip since 2008. New technology is valuable to the U.S. economy in the sense that it will allow us to become even more independent of what goes on in the rest of the world.
Here’s the bottom line. We live in a world that runs on oil. War in the Middle-East puts that supply at risk which makes investments scarce. The local South Florida real estate market has weathered lots of storms. Stay tuned as we continue to watch the events halfway around the world affect our real estate market.
From the trenches,
Real estate and foreclosure defense attorney Roy Oppenheim passionately defends Florida homeowners and investors from foreclosure, arranging short-sales, loan modifications, mortgage advice, commercial litigation, and business related matters. Roy is also the original creator of the South Florida Law Blog, named the best business and technology blog by the Sun-Sentinel. Share your comments and thoughts on the Oppenheim Law digital media social networks; they’d love to hear from you.
Written by Roy Oppenheim for the South Florida Law Blog.
As 2014 continues to move along, one disturbing trend on the horizon is the re-emergence of Wall Street’s presence into the residential housing market. This time however it’s a horse of a different color and it could mean trouble.
During the last economic cycle, Wall Street provided easy money to anyone with a pulse, then bundled up these mortgages, and called the sacks of garbage Grade A securities as they were sold off to unsuspecting investors around the world as well as here at home.
Now eight years later we are seeing a variation on an old theme amid froth and bubble. This time instead of serving the investors with a monthly stream of income based on purported mortgage payments, Wall Street is providing investors with a security backed by the rental income of single-family homes.
WESTON, FL (PRWEB) September 26, 2013
From Wall Street to Main Street, attorney Roy Oppenheim, a thought-leader in the area of foreclosure defense and the founder of the South Florida Law Blog, will hold court with three Broward County Circuit Court judges providing his unique perspective on South Florida’s foreclosure crisis.
Oppenheim, who led the fight against the Florida Bar earlier this year concerning its support of new foreclosure legislation, will serve as the only attorney on a three-judge panel to discuss and likely engage in a lively debate about: “What judges want foreclosure attorneys to know.”
His distinguished colleagues from the bench are Judge John B. Bowman, Judge Mily Rodriguez Powell and Judge William W. Haury Jr.
Oppenheim also will serve as keynote speaker at the event, which will take place Oct. 11 from 9 a.m. until 12 p.m. at the Broward Center for the Performing Arts. The event is part of a series of seminars put on by the Daily Business Review and for which Oppenheim Law is a Platinum sponsor. Continue reading