Falling oil prices should be good for real estate markets

This Economist article Why the oil price is falling explains the background to falling oil prices which should, in general, be good for the US economy next year and by extension good for the real estate market which, having largely recovered from the Great Recession, is now more dependent upon economic growth for continued gains.

The table below shows forecasts from IHS Global Insight for the US economy in 2015 at different average oil prices:

Source: IHS Global Insight, The Wall Street Journal

The US, however, has tremendously increased its oil production in recent years. That means, of course, that some States will suffer from a lower oil price, as explained in this ABC News Falling oil prices raise concerns for States report.

Any economic or real estate forecast always bears the caveat “barring unforeseen geopolitical developments.” I was tempted to head this post:What will Russia do? If I had to cite my biggest concern for 2015 it would be how Putin will react to the continuing pressure that the low oil price, coupled with sanctions, is putting on the Russian economy and exchange rate, not to mention the fortunes of the oligarchs. It would be foolish to rule out further what Bloomberg describes as “regional geopolitical adventures.”

And that would not be good.

 If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or [email protected].

Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty

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