Iran To Help Housing? It Could Happen...

Posted by urbandigs

Thu Aug 24th, 2006 09:23 AM

A: Lets go outside the box today. Lets analyze what is happening in the geopolitical world and see how that might affect housing; if at all. Specifically, could the latest news out of Iran affect the price of oil, which in turn will affect inflation pressure, which in turn will affect the US economy, which in turn will affect the fed's future moves with interest rates, which in turn will affect purchasing power, which in turn will affect the buyer pool for housing?

iran.jpg

In recent headlines:

Russia Still Seeks Iran Solution

Iran Tests Short-Range Missile

Iran: U.S. Mideast Plans "toppled"

Iran To Expand Nuclear Activites

...the most recent one titled "Iran says it's willing to resume talks" seems most optimistic. Included in this article are:

The Iranian government has provided a detailed written response to a package of incentives offered by the United States and other Western nations for Tehran to roll back its nuclear program.


So what if a resolution occurs. Here is a breakdown of what might happen for both case scenarios.

IRAN AGREES TO RESOLUTION & HALTS NUCLEAR DEVELOPMENT (in order)
  • Confidence will increase as a conflict is avoided

  • The 2nd Largest Exporter of Oil (holds estimated 132,000,000 barrels of oil in reserves) continues normal production and exporting. Oil supply shortage avoided. Helps in easing the price of Oil

  • Oil as an inflation pressure will ease

  • Lower oil prices assist in preventing a serious recession and hurting the US & Global Economy's

  • Fed more likely to keep rates unchanged

  • Money does NOT get more expensive to borrow in short term

  • Purchasing Power stays unchaned or more importantly, doesn't restrict maintaining a healthy buyer pool


    • Now the other scenario:

    IRAN AVOIDES RESOLUTION & ACTION REMAINS POSSIBLE (in order)

  • Confidence will decrease as a conflict is now likely; sanctions or military.

  • The 2nd Largest Exporter of Oil (holds estimated 132,000,000 barrels of oil in reserves) disrupts the world's oil supply. Energy prices spike to above $80/barrel and no end in sight. The US & Global economy's face another energy crisis.

  • Oil as an inflation pressure will rise dramatically

  • Higher oil prices assist in causing a serious recession and hurting the US & Global economy's

  • Fed more likely to raise interest rates to combat inflation

  • Money gets more expensive to borrow in short term

  • Purchasing Power restricts combined with a slower US economy makes for smaller buyer pool


    • Interesting? Yes to say the least. So, it does pay to take a step back and have a general understanding of what is going on in the real world that we don't have ANY control over. We just have to deal with the ramifications of either scenario and being educated on what will probably happen in both cases makes us all wiser for future investments that are made. Or, for at least risk assessment in our investments.

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