Did Gas Prices Cause the Real Estate Bubble to Burst?
Saturday, May 10, 2008
A recent drop in home values in certain communities across the country has been blamed on everything from subprime loans to slowing local economies, but a new report says escalating gas prices may have added significant fuel to the housing slowdown.
CEOs for Cities, a group composed of civil, corporate, nonprofit and academic leaders, released a report Friday called “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs.”
The report suggests home values dropped the most in far-reaching suburban areas, where homeowners are dealing with longer commutes and paying more for their daily transportation. CEOs for Cities concluded that cities with strong infrastructures, and close neighboring areas, are seemingly doing better when it comes to home price appreciation than their distant suburban counterparts.
The group in a recent report, said, “For example, the average house in the 60618 zip code in Chicago (5.6 miles from the downtown loop) appreciated from $374,000 to $410,000 (an increase of $36,000) between the fourth quarter of 2006 and the fourth quarter of 2007. A house in suburban Buffalo Grove (60089) that sold for the same price in 2006, declined by $30,000 over the course of the year.”
Below is a verbatim list of suggested measures for dealing with the gas price hike, as well as the declining value of American homes, according to the CEOs for Cities report:
relative decline in prices in sprawling suburbs is likely to persist because of the continued high price of gas, and governments should plan accordingly.
The market for higher density and redevelopment in close-in neighborhoods is likely to grow stronger, and local land use plans should accommodate this shift.
Government can help families save money by making it easy and convenient to live in mixed-use, close-in neighborhoods served by transit.
Reducing vehicle miles traveled not only saves families money, households that drive less have more to spend on other things, stimulating the local economy. Additionally, reducing oil consumption not only cuts greenhouse gas emissions but lowers the trade deficit.
Many distant exurban developments may no longer be economical, and propping up building and homeownership in these areas encourages unsustainable settlement that makes families even more vulnerable to future gas price increases
CEOs for Cities, a group composed of civil, corporate, nonprofit and academic leaders, released a report Friday called “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs.”
The report suggests home values dropped the most in far-reaching suburban areas, where homeowners are dealing with longer commutes and paying more for their daily transportation. CEOs for Cities concluded that cities with strong infrastructures, and close neighboring areas, are seemingly doing better when it comes to home price appreciation than their distant suburban counterparts.
The group in a recent report, said, “For example, the average house in the 60618 zip code in Chicago (5.6 miles from the downtown loop) appreciated from $374,000 to $410,000 (an increase of $36,000) between the fourth quarter of 2006 and the fourth quarter of 2007. A house in suburban Buffalo Grove (60089) that sold for the same price in 2006, declined by $30,000 over the course of the year.”
Below is a verbatim list of suggested measures for dealing with the gas price hike, as well as the declining value of American homes, according to the CEOs for Cities report:
relative decline in prices in sprawling suburbs is likely to persist because of the continued high price of gas, and governments should plan accordingly.
The market for higher density and redevelopment in close-in neighborhoods is likely to grow stronger, and local land use plans should accommodate this shift.
Government can help families save money by making it easy and convenient to live in mixed-use, close-in neighborhoods served by transit.
Reducing vehicle miles traveled not only saves families money, households that drive less have more to spend on other things, stimulating the local economy. Additionally, reducing oil consumption not only cuts greenhouse gas emissions but lowers the trade deficit.
Many distant exurban developments may no longer be economical, and propping up building and homeownership in these areas encourages unsustainable settlement that makes families even more vulnerable to future gas price increases
