Question: How Might Higher Energy Prices Affect the Housing Market?

Higher energy prices don’t hit housing in a straight line — but they ripple through it. With oil recently above $100 a barrel, the cost of just about every- thing increases: from gas, to goods, to construction — fueling inflation. And inflation is what keeps mortgage rates elevated. That’s the real connection.

We’ve already seen mortgage rates tick up alongside geopolitical tension, and even small increases can slow buyer activity. Buyers are highly payment-sensitive. In Marin and the Bay Area, that doesn’t mean a downturn — it sig- nals a shift. Buyers get more dis- cerning — gravitating toward well- located, high-quality homes and pulling back on anything that doesn’t offer 99% of what they are looking for.

What I think is more important, however, is the “Confidence Factor.” When global events drive energy prices higher, it introduces uncertain- ty — and uncertainty tends to make buyers pause. We saw that as a major factor in Northern Marin in late 2025. Ultimately, the effect of higher energy prices isn’t immediate or uniform.

The key variable is duration. Short-term spikes tend to pass. But if energy prices stay elevated, housing demand will slow. So, it’s less about oil itself — and more about what it does to confi- dence, inflation, and the cost of money.

Liz was featured in the SF Chronicle for the weekly Real Estate “SoundOff” on Sunday, March 22, 2026, to answer this question. The above is her longer answer to this question.