The impact of rising gas prices on suburbia

The Developments blog at the Wall Street Journal has an interesting post on the long-term impact of rising gas prices on suburban development -- a subject this blog has discussed on numerous occasions and well before the recent run-up in prices at the pump (hat tip to Patrick.net):

Rising gasoline prices have affected much of American life –- from the cars we drive to the vacations we take. A new study, however, indicates that increasing gas prices may have the strongest impact closer to home — the houses we choose to live in.

In a report entitled “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs,” released this month by CEOs for Cities, economist Joe Cortright contends that while predatory lending and subprime mortgages had a hand in today’s housing crisis, higher gas prices played a major role –- and will have a much longer-lasting impact on U.S. consumers’ home-buying preferences...

Higher gas prices negatively impact housing prices by sapping home buyers’ budgets and leaving less to spend on housing, and by making consumers less apt to bid more for homes in less centrally located suburbs, he explains.

The study notes that while initiatives by states and the federal government to ease the housing market’s woes will have some positive effect on the real-estate market in the months ahead, higher fuel costs will permanently impact the suburban landscape as more home buyers choose to reside in closer-in locations that offer shorter commutes and mass transit.

He point out that in metropolitan areas like Chicago, Los Angeles, Pittsburgh, Portland and Tampa, home prices have fallen more in farther-flung ZIP codes than in close-in neighborhoods. For instance, in Chicago, while housing prices have remained stable in close-in neighborhoods within three miles of the city’s central business district over the past 12 months, home prices have fallen 4% in “distant” neighborhoods 13 miles from the central business district. And in Los Angeles, while home prices have dropped 6% in close-in neighborhoods, they have decreased 10% in distant neighborhoods, according to the report.

Meanwhile, an article in Sunday’s Arizona Daily Star newspaper looked at the effect gas prices may have on suburbs in Tucson, Ariz. While some individuals quoted in the article expressed a desire to move closer in to the city to cut down on gasoline costs, other said they prefer to remain in the outskirts despite fuel costs because they perceive the suburbs to be more family friendly and safer than residing in the city.