It seems to be a trend: the press is noticing that rising transportation costs are starting to erode the value of housing prices in far-flung suburbs. See, e.g., this Olympian article, and this article from the LA Times.
On the one hand, this is perfectly consistent with what I’d expect. As gas prices rise, living in far-flung neighborhoods gets more and more expensive, while housing that’s close to transit, stores, and jobs seems more affordable. If Econ 101 is any guide, those forces will undermine suburban housing prices, and could even ease the “drive ’til you qualify” phenomenon into reverse.
On the other hand, the real estate market is just now recovering from a prolonged state of extreme wackiness—and I’m sure that it’s possible to find examples to support just about any point you’d want to make about real estate values. Perhaps the press happen to be cherry-picking a few good examples that support their story lines, while ignoring other, contradictory evidence.
So if anyone out there in blog-land has the time or inclination, please point me in the direction of any actual studies on the issue—say, credible academics who’ve compared real estate trends in both sprawling and less-sprawling neighborhoods, or mortgage industry analysts who are advising lenders about where to focus their lending. I’d love to know whether falling land values in suburbia is a genuine trend, or just a media fad.
I wonder if this might actually worsen “drive til you qualify”. If prices fall furthest in car-dependent suburbia, then the price differential pushing first-time-buyers out to such areas would only get worse.
That’s why I love you, Eldan!!Another way of looking at things: if there’s a 1-1 correspondence between gas price increases & purchase cost (or rental cost) decreases, then rising gas prices will have *no* effect on drive-til-you-qualify.I suppose some empirical research would help here. My armchair theorizing ain’t worth much…
ClarkDefinitely do read Joe Cortright’s latest study for CEO’s for Cities if you haven’t already. I thought I had seen it here, but maybe not.”Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs” http://blog.smartgrowthamerica.org/?p=188
Clark -Christopher Leinberger with the Brookings Institute has done research showing a premium of 40-200% on a price-per-square-foot basis for walkable urban areas compared to sub-urban, and may be a good source for data. Here’s a good review of his newest book:http://goodspeedupdate.com/2008/2179and he has this article published in the Atlantic Monthly in March:http://www.theatlantic.com/doc/200803/subprimeand his website is here:http://www.cleinberger.com/
*blush*and that’s a good point – it’s really the relative size of the two price changes that matters, not either in isolation.
An article a couple of years ago in the WSJ foreshadowed your observation. It described developers’ pricing of houses in Orlando suburbs, where every 10 minutes of rush-hour commute discounted the price by $12,500 (if I remember right). They’ll look like ghost towns (without the saloons) if things continue this direction. I approve.