Thanks to inflation, rising home values, and pandemic-related supply chain factors, consumers have gotten used to paying more for many of the goods and services we all need to get by. This increase in pricing hits especially hard at the gas pump. With the price of gasoline rising steadily nationwide, many households are feeling the crunch. Though we all know rising gas prices can complicate your transportation budget, could the price at the pump directly fuel an increase in the cost of homes?
The most direct connection we have seen between the price of fossil fuels and home prices came during the recession of 2008. During this time, gas prices in the US rested above $4.00 a gallon on average, adding to the sense of financial insecurity felt by consumers. Unlike many household budget items, fuel is something most people simply cannot go without. If forced to pay more for the gas we rely on to get around, spending power in other areas will suffer. During the recession, lack of funds for housing led to an increase in home pricing as landlords increased their prices to compensate for flagging demand and increased turnover.
The cost of fuel can influence the housing market in other ways. Demand for fossil fuels impact not only the price of gasoline, but also natural gas used to heat homes and the fuel used at power plants to generate electricity. As gas prices go up, home utility costs increase as well. This only worsens the cycle of lowered consumer buying power and makes budgeting for utilities an obstacle for many would-be buyers and renters.
Similarly, the taxes places on fossil fuels and carbon emissions are felt even more when prices are higher. These costs are passed on to consumers as part of the cost of doing business with the major fossil fuel providers.
The good news about all these factors is that they are temporary. As fossil fuel prices inevitably stabilize, their damaging impact on consumer budgets will be felt less.
If you’re interested in obtaining a mortgage but have questions about your budget, the experts at First Ohio are here to help. Contact us today to review your options and find the mortgage that’s right for your situation. This easy to use calculator can also help you determine how much mortgage you might qualify for.