As Oil Races Past $85 A Barrel, What Does This Mean For Real Estate?
So the cost for a barrel of light, sweet, crude oil is over $85 dollars today
. That should tell us plenty about the economy, the housing industry, and the upcoming summer travel season. The issue is that as the price for a barrel of oil goes up, other industries slow down. Not to mention that the higher costs for a barrel of oil translate into the daily and weekly budget adjustments for the average American and it really causes people to change their lifestyles.
As the housing market languishes, even with the extended tax credits for first-time home buyers, people who don't understand macroeconomics are struggling to understand why. This begs to ask the question, that if real unemployment is over 17%, job creation is dead in the water, oil is rising, new housing starts have all but started, how can those in the government expect people to actually buy a house?
Ever try to qualify for a home loan without a job? Ever try to qualify for a home loan when commercial lending has all but dried up?
These are questions that shouldn't be hard to answer, but those in Washington don't understand because they aren't business people.
So back to a barrel of oil. If your summer plans include travel and vacationing, expect the cost of the commute via car or airplane to go up at least 20%. Oil affects every aspect of our economy. Over the road truck drivers, local freight haulers, Americans looking to go to work every day are all going to be punished by the rising cost of a barrel of oil.
If OPEC wasn't focused on bleeding America dry, they'd open up oil production to a full 100%, rather than a meager 80%. Artificially driving up the cost of light, sweet, crude oil punishes the American economy more now than ever as the fledgling recovery barely hangs on.
How does Oil affect the housing industry? It's back to the point of freight and trucking supplies to the job sites. If contractors can't afford the rising costs of fuel and the pressure it puts on the cost of goods as a whole, how can contractors build new houses?
When housing starts are down and there is a glut of existing available housing, why would someone ask for a new home to be built? Don't get me wrong, some new houses are still being built, but the industry as a whole is by no means flourishing.
So what is the prescription for a sick economy on high-priced Oil life support?
It has to do with housing, but not new housing starts. It's investing in existing Real Estate that's going to bring the economy back from the brink, no matter what Washington, OPEC, or anyone else throws at the American economy.
Invest your self-directed IRA or 401(k) in Real Estate if you want the opportunity to retire when you want to. By purchasing a couple deeply discounted pieces of property in this down cycle, you can be poised to retire very quickly after the rebound if you sell your property for a huge gain.
So protect your retirement. Protect your future. Defend yourself against things that are out of your control. Invest your IRA or 401(k) in Real Estate.
by: Paul Whitacre
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