I get tons of emails every day into my inbox from a few Google Alerts I have set up. (BTW, I love Google and pretty much everything they put out). I don’t comment on all of them or even read all of them for that matter, but this one is pretty good. Business Week published an article on the affect that increasing gas prices is having on the real estate industry. You can read the article here.

There is tons of information out there depicting just how bad things are in real estate, but this article introduces a slightly different twist. The speculative price of oil is driving gas prices through the roof (more than $4 per gallon in most places). Not all of it is speculation, but a good chunk of the move from $100 per barrel for oil to $130 is indeed.

This article introduces a new twist: for those who have survived the real estate bubble so far and want to do the right thing by keep making payments to the mortgage, they are now faced with very difficult decisions of filling up their tank or doing the right thing and staying current on their houses. These people are not the speculators that are walking away from houses because it makes sense financially. They are not the people that invested too heavily in certain aspects of real estate and the general economy is taking a huge hit on their returns. These people are the ones that have every intention of simply ignoring the massive bubble, keep living in their homes for the next whatever number of years and say “I will be fine since I don’t have to sell right now and I don’t plan to move.”

These people are the ones, right now in the midst of this perfect storm, are struggling with doing the right thing by staying current with their commitments to their lenders VS. feeding their family or filling up their gas tank to go to work. What a decision to make!

I am one of the persons who is not fretting over my house as I purchased it right, have lots of equity (or did) and have a low interest rate that is not changing anytime soon. My job is in trouble, but I have great education and experience and know I can find another one very easily. But what happens when faced with this decision of gas (and food for that matter) and paying the mortgage?

What happens to most good people who have survived thus far is a rationalization that could very well be the undoing of our entire financial system. They would rationalize, like me, to simply not pay the mortgage. If there were ever a time in our history where NOT paying a mortgage would be deemed OK by our society, it is right NOW. No matter who I speak with, people are all aware of the demise of Las Vegas real estate and real estate in general. They are also aware that gas prices and food prices are pushing many good folks right over the edge, like the Business Week article depicts.

This is a ticking time bomb that needs attention at all levels in our society. Our financial system simply can not handle massive foreclosures of mainstream Americans. It can absorb the normal, or even above normal amounts, stemming from the speculative investing we saw during the run up. But when folks who were no where near this speculation are now making these choices, and rationalizing not paying their mortgage, things are ready to be completely turned on its head…