Oil is hitting prices that haven’t been seen in over a decade, and gas prices in many parts of the country are under a dollar a gallon. These low prices are due to an increase in supply as the U.S. lifted sanctions against Iranian exports.
“You can’t say this was unexpected but the Iran news is an additional factor that’s working against oil prices,” says Bart Melek from TD Securities to Reuters.
Oil has recently hit $28 per barrel and Capital founding partner John Kilduff predicts that oil prices could get as low as $18 per barrel this year (CNBC). Our Research Services team projects the drop in oil prices to continue for 2016.
What This Means for Real Estate Investors
Lower oil prices mean lower fuel prices, which in turn have historically provided a boost in the tourism and leisure sections of the economy. Traveling becomes more affordable, and more people take advantage of this. This is good news for real estate investors who own rental properties in areas of the country where regional economies are heavily supported by tourism.
For instance, Orlando is a thriving real estate market heavily affected by tourism with a majority of its renter supply in tourism-related positions. The boost in city visits from tourists this year will translate to a stronger economy and more job growth for Orlando, since more personnel will need to be hired to assist with the larger flocks of tourists coming to the area to enjoy this metro’s amusement parks.
These factors make for optimal real estate investing conditions as the demand for rental housing increases and rents rise to keep pace with demand. To learn more about how additional economic conditions make 2016 the year to invest in single family rentals, watch our webinar -“5 Economic Reasons to Say YES to Single Family Investing in 2016.”
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Disclaimer: Information has been obtained through our research and from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions. Additionally, there is no obligation to update, modify or amend the materials contained herein or to otherwise notify a reader in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Vacancy is based on professionally managed three-bedroom rental units. Investment sales include single-family and condominium units defined by absentee tax records.