Up until recently the impact of Peak Oil has been relatively negligible on our local economy. But with the big rise in gas prices we've seen in recent months that's all changing. As much as I would like to report good news to you about all of this the truth is that the Temecula area stands to be hit harder than most other areas because of the long commutes many people have to work and the amount of money gasoline will now be taking out of their budgets. As I'm writing this to you, three out of the five closest homes to me across the street have now been foreclosed upon.

Two years ago I wrote to all the City Council members in both Temecula and Murrieta about the coming ramifications of Peak Oil on our community and offered to educate them on the subject, but not one of them even responded to me. Since the price of gasoline is having more of an impact on us now, I will contact one or more key members of these groups again and see if they're willing to learn more about the subject this time.

Be careful when investing in real estate right now. While property values have dropped considerably they are likely to continue dropping much further. People are excited about buying homes at the lower prices right now, and that's helping our economy, but I genuinely feel that this correction still has a long way to go. The reason is that our economy looks like it's going to get worse, and our energy prices are going to continue to increase over the next several years. We may have periods of stagnating or slightly falling energy prices along the way, but year-to-year energy prices will continue rising. And this combination of both a tougher economy and rising energy prices will cause the value of real estate to go down even further.

The best example I can give you around this is of one man in Detroit who purchased 10 homes for $70,000.00 each. The homes had previously been selling for $140,000.00 each when the economy was better, so he was convinced that he had made a great buy. But since then homes in the same neighborhood have now been selling for just $35,000.00.

So remember it's not a matter of whether our real estate values have fallen considerably. What's more important is "Are they at the bottom of where they're going to be?", and I feel that the answer is "No". The only exception would be if inflation comes back in a big way, and that alone could drive the values of properties upward.

So be prudent in your spending and pay attention to the underlying fundamentals of what's going on in our economy. And if you want to get a much better idea of when to buy and sell homes in the area, visit http://www.RealEstateTiming.com. This is Robert Campbell's Web site, and Robert correctly told everyone in Southern California in August of 2005 to sell their homes at that time if they wanted to cash out at the highest prices, and he was absolutely perfect in his assessment at that time. In addition, Robert feels that we've got a long way to go until we hit the bottom of this real estate market. I highly recommend both Robert's book and his real estate timing newsletter to you, and if you're interested you can read the May, 2008 edition of his real estate timing newsletter right here:

http://www.realestatesalescoach.com/campbell.pdf

Jim