FORECAST: Are rising fuel costs hurting the Connecticut housing market?

The short answer is yes, and no- largely depending on your price bracket. There are more than a few issues with rising fuel costs. The cost of gas  to get to work, and the costs to heat your home (that going to work pays for). Luckily, the heating season is pretty much over until late  September, but that doesn't diminish the fact that the cost to fill up even a 250 gallon oil tank for your home is now about a whopping $1000 when it was 30% lower just a few months ago.  

We all feel the pain at the gas station. It seems like the gasoline  dispenses even slower than it used to just to remind us how much we are paying! Most cars come equipped with a 16 gallon tank, and you can expect to pay anywhere from $65 for regular gas to $80.00 for premium just to fill your tank.  Since the start of 2011, the average price for gasoline is higher by 54 cents per gallon. Now, assuming an average of 22 miles per gallon on a passenger car, that’s an increase of 2.5 cents of gasoline per mile driven in the last 90 days alone. It’s a cost that adds up quickly, and can affect a household budget.  Plan for higher pump prices moving forward, too. Historically, gas prices surge between April and June.To put it in perspective,  just last year at this time,  gasoline was $1.00 cheaper per gallon!

That all affects the economy, and when the economy is affected, home prices are bound to follow suit. Over the past few months, buyers have become  increasingly aware of escalating fuel costs, and that affects the local housing market in a few ways.

First, the lower price ranges here will be more affected negatively than the medium to high price ranges, which may see little or no difference in seasonal real estate sales activity, if at all. The reason why is that
the rising fuel costs would only make an unnoticeable dent in the middle and upper price bracket.

If the prices continue to escalate  at a higher rate than normal during the seasonal fuel price surge, and/or last longer than it has historically, THEN the upper price ranges will feel the pinch in real estate sales, and that is due to to less buyers entering the market in the lower ranges, which will impede the mid-priced housing market, which in turn hinders the higher ranges. That would take some time to occur,
and coninued rising fuel costs would play a major factor.

The lower priced inventory in each town suffers immediately, but not overwhelmingly so-unless fuel prices skyrocket quickly. The reason for the sluggish starter homemarket  is that the first time buyer pool is concerned about affordability. If the first time buyers don't purchase those starter homes, those homeowners in turn  can't move in to the mid range homes, and the mid range homes would not be moving to the higher priced homes. A note- the cost of gasoline  plays a major role in where the buyers migrate to, since "closest to work" will seem to make the best sense.

ADVICE: If you are looking to make a move sometime soon, and you have a starter home, now is the time. If you just made it into the mid-range in your town or city, now is also good.  The upper ranges are currently unaffected and are still good and should be for at least the remainder of the summer. Call me, or send me an email and we'll review your particular situation and see exactly what the best plan of action is for you.