The Housing Chronicles Blog: Gas prices forcing people out of suburbs

Tuesday, June 17, 2008

Gas prices forcing people out of suburbs

Although this trend of people moving back to urban areas has been happening for several years, it will likely be rushed by rising gas prices, which means that suburban areas without decent public transportation options will likely take a bigger hit. First, from a story:

It may seem a bit drastic, but more and more people are taking what is perhaps the ultimate step in cutting gas prices: They're moving...

Factors like distance from work, access to public transportation, and proximity to shopping are gaining ground on square footage and whether or not the home has a yard and pushing people into more densely packed areas.

"The high cost of gas is cited as a driving factor in increased interest in urban living," said Jim Gillespie, chief executive of Coldwell Banker, a national realty franchise. "Over the past several years we've seen a boom in downtown living all over the country."

It seems like the people actually making the move so far seem to be renters as opposed to owners, as not renewing a lease is obviously much easier than selling a home.

While their wallets may be happy, whether the quality of life is improving for the people who move is debatable.

"I went from a beautiful home with a big back yard to an itty-bitty studio apartment," said Erinn Thomas, who moved from a suburb of Reno, NV, to the downtown area to save on gas. "But it's what I had to do to eat."...

Next, from an L.A. Times article:

Rising gas prices may be the latest ailment afflicting the housing market, as figures released Monday showed Southern California home prices plunging 27% in May from a year ago and falling even more precipitously in distant suburbs.

Outlying areas like the Antelope Valley and the Inland Empire have long appealed to people who were willing to accept a burdensome commute for the chance to own a better house. But buyers are increasingly factoring gasoline costs into their purchase decisions, said Dan Griffith, a Rancho Cucamonga-based real estate agent...

Price drops were especially steep in far-flung suburbs. The median price fell 38% in Lancaster and 42% in Palmdale, compared with 23% in Los Angeles County overall.

San Bernardino County saw prices drop by 31%, but it was worse in the remote town of Victorville, where values declined 43%.

Christopher Leinberger of the Brookings Institution, a Washington think tank, says home values in these so-called exurbs may continue to languish long after urban markets begin to recover, thanks to higher gas costs.

"Under the old model we have lived with for the past 50 years, you could drive away from major employment concentrations until you could qualify for a house because cheap energy costs made it possible," Leinberger said. "Now as energy prices go up, the housing prices out there on the fringe take a major hit.".

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