I moved to Connecticut in October, 1973, just in time for the oil crisis. The crisis was the result of an oil embargo by Opec member nations, plus Egypt and Syria, to punish those countries that had supported Israel, during the Yom Kippur War.
The immediate effect was not only a spike in prices, but a shortage of available gasoline, at the pumps. "Filling up" became a carefully planned event. If you had an odd-numbered license plate or a vanity plate, you could purchase gas on odd-numbered days. Even-numbered plates could purchase on even-numbered days. The 31st of the month was open to all. In addition to knowing which day you could buy gas, you would also have to be prepared to wait in line for as long as two or three hours.
In February 1974, the government proposed Project Independence, a plan to make the United States energy independent. In March, the embargo was ended by all the participating nations, except Libya. Gasoline prices, which had averaged 35 to 38 cents/gallon, during the spring of 1973, surged to 55 cents/gallon, in June 1974. With the lifting of the embargo and the rise in price, the gas shortage disappeared. Apparently, so did our plan for energy independence. Prices spiked, again, in 1981, as a result of the Iran Iraq War, but it was not accompanied by a gas shortage.
From the mid 1980's, until September 2003, the inflation adjusted price of crude oil was under $25/barrel. After that, there was a steady rise, to just over $99/barrel, by Nov 2007. During the first half of 2008, oil prices continually set record highs. Prices touched an all time high of $147.27/barrel, on July 11, Prices have abated, somewhat, and the national average for regular-grade gasoline is expected to average $3.84, in 2008.
Although average prices vary from state to state, one thing is certain. Higher prices are here to stay. Connecticut gas prices are the second highest, in the country, behind California. Driving away from the pump, with a tab for $50, $60 or even $70 is taking a toll on everyone.
Higher gasoline prices appear to be having an effect on how real estate business is being conducted. Fewer agents are going out on Broker Tours. Agents are coming into the office, less frequently. Many show up only when they have phone duty, need to file paperwork or attend a meeting. Some agents are reluctant to service rental clients, instead referring them to the listing agent. Yes, I know, those renters may be next year's buyers, but this year's low ROI is the more immediate problem.
REALTORS® are more discerning about the buyers with whom they choose to work. Driving around with tire kickers is just too expensive. In some cases, agents may be demanding that their buyers be pre-qualified, before getting in the car. For sure, agents still have a fiduciary responsibility to do the best job possible, for their clients. However, nowhere does it say they must work with every Tom, Dick and Harry.
Perhaps, we as agents will start to conduct our real estate activites, more like a business, which it is. Certainly, the use of our cars is an integral part of our business. We still need to service our listings, putting on keyboxes, hosting Open Houses, checking out new competitive listings and sometimes meeting with our homeowners, to review and counsel them. We will continue to conduct town tours, for our relocation clients. We obviously need to drive our buyers, to see the homes they want to visit. Perhaps, however, by honing our upfront interview skills, we can do a better job of selecting the homes to see and spend less time viewing inappropriate properties.
Ultimately, if the cost of doing business becomes too high, our ranks may diminish. What's happening in your market?
Copyright © 2008 Marilyn Katz, All Rights Reserved, Active Rain - High Gas Prices- its effect on the real estate business
For those of us who remember what a record is, there will be a collection of 78's.
