How Gas Prices Affect the Condo Market...
Posted on March 29th, 2011
1. When energy is more expensive, everything else is more expensive.
In relation to office condos, particularly new construction, this means that it’s getting more expensive to build, so the product is getting more expensive. Contractors must bring the building materials to the site, and because gas costs more, their costs are going up to do this. This increase is passed through to the developer, who passes it through to the consumer.
2. Commercial agents are more smarter about research, marketing, and touring properties.
Commercial agents are beginning to have more of a discriminating taste in choosing what to tour, how to tour, and who to tour. Agents are less likely to take a potential client out to several sites in one day if that potential client is not a qualified lead (example, can’t get financing). I think this small consequence is affecting the way agents deal with clients. Agents are going to want to get to the heart of the matter more quickly; they not only need your interest, but they need proof that you are actually capable of buying/leasing before they can expend the time, energy, and cost of taking you to multiple properties. It’s also shifting marketing strategies, subtly pushing our agents to become even more dependent on online sources and telephone conferences to gather information on a property.
Advice to potential buyers: Before you do any looking around, make sure you’re even qualified to buy. Work with your agent and bank/loan officer to determine what, if any, properties will fit with your financing options before you waste a bunch of time driving around.
3. Commercial Lenders are more cautious.
It’s harder to get a loan because banks have been burned recently. With costs going up and revenues standing still, people are defaulting. And banks don’t like it and it makes them not want to give their money out to folks. And because loans are harder to get, sales are harder to close. It’s a viscious cycle, folks.
BUT the good news is - if you are a qualified buyer, it’s definitely a buyer’s market.
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