Higher gasoline prices are rarely welcome news for consumers, but a study shows they are linked to lower home prices.
According to a working paper by faculty at Florida Atlantic University and Longwood University, home prices fall $4,060 for every $1 increase in the price of a gallon of gas.
A co-author of the study, Bennie Waller, a professor of finance and real estate at Longwood, told the Wall Street Journal that high gas prices may discourage real estate agents from aggressively marketing homes listed for sale. Specifically, agents may limit the driving they do to show homes to potential buyers.
Waller also said the study gas prices have a disproportionate impact on inexperienced real estate agents, defined as those with no more than four years of experience as an agent.
He said a high gas prices represent “a fixed cost for all agents, but older agents can spread it out over lots of transactions. Younger, less experienced agents don’t have a lot of transactions to spread those fixed costs over.”
Waller and study co-author Ken Johnson, a professor at FAU, reviewed 17,122 homes sales in central Virginia between 1999 and 2009 and correlated the data with gas prices, which ranged from $1.11 per gallon to $4.12 during the 10-year period.