Metamorphosis Consulting, Inc.

Management Consulting Firm

Economic Considerations – Gas Prices, Stock Market & Global Economic Slowdown

by

  • Economic Considerations – Gas Prices, Stock Market & Global Economic Slowdown

The ability to discuss current events and their impact on real estate can be a key to building and maintaining relationships with your sphere of influence. Talking points should be discussed in social settings and face-to-face communications to build your brand as being a “Trusted Real Estate Advisor”. They can also be shared via e-mail with buyers, sellers, listing prospects, past clients, advocates and your sphere of influence. Consider the following topics for business discussion this week:

  • Stock Market–  Global markets tumbled last week as a result of concerns over:
  1. Global economic slowdown
  2. Deflation
  3. Sharp drop in crude-oil prices
      • Impact on Real Estate – Recent volatility in the stock market (400 point drop in the DJIA last Wednesday, before recovering and closing 1% down Friday at 16,380) should make many investors give thought to pulling some of their money out of the stock market and investing it into real Estate.
  • Gas Prices – Gas prices have dropped more than 20 cents in the past month, plunging to their lowest levels since 2011 according to AAA. The national average is now at $3.14 and could drop to $2.75 by the end of this year, the lowest since 2010. Weak seasonal demand and an increase in supplies from fracking in the U.S. are the primary causes of the drop in gas prices. Also, lower oil prices in the U.S. contribute to domestic expansion.
      • Impact on Real Estate – When consumers experience a drop in energy costs, confidence levels rise as a result of little more money in their pockets. Confident consumers tend to be more comfortable moving ahead with major purchases such as real estate. Also, with energy stocks being hammered recently, it may be a good time to pull funds out of the stock market and put them into real estate.
  • World Economic Slowdown– World economic slowdown could hurt U.S. economic expansion and prompt a delay in the Fed raising interest rates. In a Television Interview last week, IMF Managing Director Christine Lagarde stated that the Euro-Zone’s lower than expected growth needs to be fixed. Disappointing growth in Japan and China could hurt U.S. exports.
  • Impact on Real Estate– This is a mixed-bag. While a drop in exports would hurt economic growth and stability in the U.S., the drag in world economic growth could also delay interest rate increases, giving the housing industry a much-need boost. Either way, rising interest rates or a slow-down in U.S. economic growth would adversely impact the real estate industry.