Arturo Alvarez-Demalde has written about how oil prices in Mexico and the United States are having an effect on the way real estate is priced in both countries. Each country is fluctuating all the time because of the way the markets work, and this article explains how the markets change in response to one another. Oil prices and real estate prices are quite different, but they are inextricably-linked.
#1: Oil Prices Have Stayed Low
Oil prices have stayed low for quite some time, and most drives have noticed they are spending less on fuel overall. Their fuel costs are remaining low, but the real estate market is seeing extra money come in because consumers have more ash to spend. The United States real estate market recovered at the same time that oil prices dropped. The two were not necessarily connected, but they happened concurrently.
#2: Real Estate In Mexico Was Slow To Recover
Mexico was one of the slowest-recovering countries from the global financial crisis, and their economy has been hit by a loss of oil revenue. The country does not have a middle class large enough to support greater real estate investment, and Mexico is still hoping for a resurgence in their market. The Mexican market may recover when oil prices recover, but they must exist in a recession-free society with higher oil prices.
#3: Will Real Estate Every Come Back Completely?
Real estate prices will recover completely when it has had time to come back from such a drop in prices. The drop in prices is starting to reverse itself, but the markets must be patient. Prices cannot truly recover until they are met with higher oil prices. Higher oil prices force higher volume in trading, and the high oil prices will help bring money in the market for commercial or industrial investment.
#4: Why Is Real Estate Important?
Everyone lives or works in some form of real estate, and the real estate market indicates how well the economy is performing. Someone who is investing in real estate will see higher prices as oil prices recover, but Americans are already enjoying record prices in certain cities.
The price of oil has dropped off so significantly that investors are waiting for the prices to rebound. A rebound of oil prices will bring back higher real estate values, and the two will continue to grow together. The American market is already on the rise, but Mexico may be next.
