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As the summer turns to Fall and the days grow shorter, the winter winds and cold temps quickly approach New England. As oil prices have risen... so to have the stress levels of homeowners as they try and figure out how afford to heat. How will this effect the area real estate markets? How will buyers or real property factor this additional cost into their figures?
Factor an average heating oil usage of 500 gallons for a moderate sized home in New England. With current oil prices around $3.50/gallon, the rough cost for one winter season on average will run a family about $1750 plus or minus.
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Now figure this price has more than doubled over the past few years so on average the New Englander is incurring an additional yearly cost of more than $1000 and in some cases closer to $2000 to $3000 for larger home. If you break this figure down into a monthly amount it works out to $80/month which can translate into about $20,000 of lost buying power if one was borrowing money at a rate of 6%. (ie $80/month is the cost of paying for $20,000 on a conventional 30 year fixed rate loan.) The New England real estate markets going forward are thus going to suffer as buyers will need to factor this new cost into their monthly payments and adjust their price range accordingly. Demand for larger houses will go down but the the flip side for sellers is that parties looking to move North will increase demand for smaller, well insulated homes, perhaps pushing this end of the market upwards.
John Herrigel is a Maine real estate agent and investor. He can be reached by phone at 207-650-5383 or visit online at Coastal Maine Real Estate Agent
By John Herrigel
Article Source:EzineArticles.com
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