Low gas prices bring high rate of home and auto sales
December 30, 2014
People tend to feel more optimistic at the beginning of a new year. It is only natural, as they set resolutions and consider new budgeting and diet tricks. But the end of 2014 has especially given people a great deal to be excited about. As this year comes to an end and holiday travel starts to wind down, people are thankful for a growing economy and low gas prices. And whether you realize it or not, low gas prices do more than help people more cheaply get from point A to B. They also help boost confidence.
Low gas prices lead to increased home and auto sales.
This gain in consumer confidence has many believing the trend will also spark increased sales of homes and automobiles.
“Anything that impacts anyone's monthly budget so significantly as the cost of gasoline will tend to make them feel better about moving up, buying a new home,” Maggie Parker of Comstock Homes told CNBC. “Our traffic is very high, and sales are quite good, especially during the typically slow December season, so it has had a very positive impact on the confidence of our buyers.”
This dip in gasoline prices comes at a great time for homebuyers, especially because the winter months aren't the most popular for purchasing. With consumers able to save more money and boost their confidence in spending at the same time, they will likely be able to set aside some money for a house in the coming months when the housing market goes into full swing. This demonstrates not only that home purchasing has been good so far, but also that it will only get better.
The New York Times noted low gasoline prices will bring down mortgage costs as well. This is because interest rates adjust with inflation. In the American economy, oil prices have a great deal to do with the economy, and therefore pull down inflation. As people continue to save money on gasoline, they are more likely to invest. To many, investing means upgrading their housing or purchasing housing for renting purposes as another form of income.
Car sales will jump too
In addition to home purchasing increases, car sales are expected to rise as well. According to TrueCar, a vehicle buying and selling platform, U.S. auto sales will increase 2.6 percent in 2015. This will bring the total number of cars sold to 17 million, which is the highest it has been since 2005.
“We see a convergence of favorable economic circumstances pushing auto demand up to pre-recession levels, including continued gains in the job market, the best consumer sentiment in eight years and low fuel prices,” John Krafcik, president of TrueCar, said in a press release. “This year has been remarkable in terms of growth and revenue coming from big gains in pickup, utility and luxury vehicle sales. We think 2015 will be even better.”
With this combination of confidence and purchasing, it is important to not get carried away. Sure, the level of consumer purchasing and low fuel prices set the stage for investment and advancement, but it is important to consider new car and home insurance if you are in the market for either. Don't forget to get an insurance quote for your new investments to make sure they maintain their values and are protected.