Reno Foreclosure Blog

I have been in real estate my entire life. I have been a Real Estate Appraiser for over 16 years.

People are constantly asking me my opinion of what real estate will do in the immediate future.

Home values in Reno have declined 40% to 70% in the last 4 years. Many areas of Reno have been experiencing stable market values in the last 12 months; however, there are still pockets of declining values.

I had been pessimistic on improving conditions for quite some time, but a couple of months ago, I reversed by opinion to cautiously optimistic – That was before the US invasion of Lybia. I am now pessimistic again.

We are in this recession because of high oil prices. The banking disaster is only a symptom of our primary economic illness – high oil prices. The price of oil in 2003, prior to the US invasion of Iraq, was $30/barrel. Gas was just over $1/gallon. In July of 2008 the price of oil was $147/barrel. That is a five fold increase in 5 years and nothing affects our economy more than oil prices. I have been stating that for over 30 years, ever since the last oil shortage in the 1970’s and 1980’s (due to OPEC policy’s).

History has proven, that every time there is a war/conflict in the Middle East, oil prices spike, and here we go again. History is repeating itself – again. De-ja-vu

So, what is my opinion on the future of real estate and our economy? It all depends on oil prices. It all depends on how long the conflicts in North Africa continue.

One last comment: From year 2000 to year 2008 “world” oil demand increased approximately 2% a year (yes that included the increased demand from China and India), but prices increased 500%. Why??????? I know why. **Do you?

The price of oil prior to the current conflict in Libya was $85/barrel. Gas was low $3/gallon. The price of oil this last week has been fluctuating from $100/barrel to $114/barrel and gas at the pump is now over $4/gallon.

We are heading back into the abyss.

**Note: The price of oil was $147/barrel in July of 2008. It started dropping just before the last US Presidential election and was at $38/barrel a couple of months after the election (as I predicted 12 months earlier). Also note: OPEC is not setting world oil prices this time.

Our U.S. politicians and U.S. Wall Street speculators are currently setting world oil prices – and the voters in this country let them get away with it.