How Will the Energy Crisis Impact Real Estate?
Posted in Real Estate Trends By Stefan Swanepoel, Tuesday, August 26, 2008.Six billion people inhabit the earth; half in cities with 500 million of them driving cars every day. One of the single most important inventions of our lifetime, the vehicle, has created an ever increasingly appetite for oil.
We have built some 50,000 power plants across the globe and collectively these engines and coal burning power plants contribute significantly to global warming by emitting harmful gasses into the atmosphere – some reports estimate as much as 7 billion tons of carbon dioxide per year. The earth's surface is trapping these" greenhouse "gases and the emissions are choking the planet of its natural heat circulation system.
Even a new study by McKinsey & Company details how the Internet is devouring more and more power and spewing out more and more greenhouse gases.
Normally nature has its way of restoring the balance through photosynthesis, but we as humans have changed the equilibrium. We have already dammed half of all rivers, converted one-third of all land for farms and pastures and deforested about 50% of the original 1.6 billion hectares of rain forests. Furthermore, rain forests are being destroyed at an ever-quickening pace and it is estimated that by 2030 we may only have 10% remaining.
That is the same year the US Department of Energy predicts that America will need 19% more energy than we use today. Another report estimates that by 2050 we will have 60 million cars and 160 million homes in America demanding more oil, electricity and power.
If you believe all the reports, it's clear we have a problem.
But, let’s step away from the greenhouse, oil crisis and global warming debate for a few minutes and look what it could mean to our industry. Let me start the discussion this week by asking you the following questions, any of which you may discuss.
1. What impact will the current path influence the decision of where future homebuyers will want to buy a home?
2. How will the current path impact property prices in cities and suburbia?
3. What could the ensuing result be on the real estate brokerage industry?
Love to hear your thoughts. Lets chat.
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Submitted by Anthony Longo on August 26, 2008 - 5:58am.
1. More and more people will move their primary residences to the city to conserve on transportation polution. (its already happening)
1.a. Once they move here, they will realize that cities have changed, buildings have changed and certainly the lifestyle amenities have changed to suit every type of lifestyle in a convenient, affordable & sensible way.
2. City prices will continue to climb and suburban properites will depreciate (accecpt for 2nd, 3rd & 4th home destinations).
3. Good question. Possibly a thinning of suburban brokers and more competition in the urban circuit.
Having operated in 33 US urban metros we have seen this trend grow year after year for the past 3 years and entering the brokerage business this year has allowed us to work more closely with consumers and actualize this trend.
Anthony Longo
Founder & CEO, CondoDomain.com
Visit the all new http://Boston.CondoDomain.com
Submitted by Bruce Hahn on August 26, 2008 - 7:06am.
American Homeowners Grassroots Alliance
The energy crisis will drive rapid increases in Internet commerce and teleworking.
Instead of driving to and from malls, people will increasingly order off the net, and let the UPS or FedEx trucks bring the products to their door.
Under increased pressure from employees and increased costs to heat and air condition, build, rent and maintain office space, more employers will support telecommuting. More newly created small businesses will be home-based for the same reasons.
All of this will help the energy crisis and help reduce global warming.
Submitted by Stefan Swanepoel on August 28, 2008 - 2:36pm.
Thanks to Carmen Multhauf who sent me this great contribution via email:
I think we are already seeing that sales are moving away from outlying areas and coming back to city center or at least to suburban center. This began even before the energy crisis when our new Gen X generation decided that family time was more important than spending hours on the long commute. Housing design began to include "courtyards" to substitute for the backyard. Entertainment centers in the home eliminated the living room to give more space to the family gathering place whether it is to be in the kitchen portion, the media portion, the electronic (computer) portion or other family choice place to be together. Interestingly, as the the urban centers revived, they also attracted the retirees who wanted the theatre district and restaurants within walking distance. The second car is going away for retirees. The energy crisis has just exacerbated the pressure on real estate sales in the outlying areas.
Your other comment about the effect on municipalities is well taken. The tax structure will see changes. The sales tax will move away as shopping centers start to close. More and more sales are internet driven. Already the foreclosure crisis has squeezed the tax income from the cities. And how will the cities affect transportation corridors and public transit. The comments I hear often are "once I get to the train station how do I get to my final destination?" We need a plan that remembers to include lifestyle in the vision.
And finally, we have seen brokerage practices change. Advertising dollars are being re-directed. Brokers must create technological tools for their agents (the average age being 51 years old and not quite as techno-savy). Office meetings are becoming dinosaurs. But, communication needs to be fostered albeit in the impersonal manner that the Millennials are choosing with networking sites. The brokers will need to have webinar office meetings.
So, thank you for always making us think. I enjoy reading your insights.
Carmen Multhauf, Broker/Owner
Training and Broker Services ( TABS)
email : admin@tabs4ce.com
website: www.tabs4ce.com