Next time you talk with a REALTOR about buying or selling a house – consider this perspective:
Impact of Rising Energy Prices Compelling Practical, Psychological Changes to Real Estate Decisions
The $4-plus/gallon of gas threshold hit this summer has pushed the real estate industry in unforeseen ways — fundamentally altering how it behaves and its understanding of markets.
It is changing the way brokers market property, how brokerages charge clients, how managers budget improvements, how tenants decide where to locate, how local governments are approaching development and transportation issues, how consumers decide where to spend money, how logistics firms manage their distribution centers, how landlords calculate their expense pass-throughs, and how lenders fund construction projects and acquisitions. It has investors adjusting their acquisition criteria and has asset managers recalculating cash flows. And these are just a few of the ways.
CoStar Advisor surveyed readers across the country this week to gauge if and how high gas and diesel prices are impacting commercial real estate. As a measure of how pervasive the topic is in their typical workday, we received more responses to the question than to any other we have previously asked.
The impact has been both practical and psychological — showing up across the board. It’s most obvious at the micro level where everyone has felt the pinch of $1 more a gallon over last summer’s prices. It’s commonplace now for the cost of a tank of gas to top $100 and it’s not uncommon to go through that every two or three days.
“Gas prices are killing me,” said Charles Paxton, president of Carolina Homes & Land Realty in Harrisburg, NC. “I spent $600 last month and barely left town. I must travel to see the site and meet the clients but I am now forced to transact as much as possible over the phone. I am now telling buyers to pay me an advance towards earned commission if they want more than I can provide over the phone. This is not going over well but I can’t continue to go broke on a sale that may never take place.”