Roman Itskovich

An interesting thought have crossed my mind lately- Are there any unexpected side effects to surging in crude oil prices? I think there are. On of them might be an impact on real-estate prices. This may will have an impact in the medium to long run but it might be a strong impact non the less. Let me explain.

There has always been a tradeoff between living in a bigger house in the suburbs and commuting to work and between living in a smaller, more expensive place in a city center, and cutting on the commute. In the past - this trade off main issue was the save time, energy and improve quality of life. I believe that the recent surge in crude oil prices is going to change that. I think that  with oil becoming more expensive by the year, transportation prices will soon become a major factor in the decision on where to live. This will increase demand for homes in city centers - which can eventually increase residential real estate prices.

Naturally, There are many other factors to this equation. Nevertheless, rising transportation prices will be an important player in future residence choice.

What do you think?

Roman