Gas Prices Impact Home Values
One of the unintended consequences of high fuel prices is the apparent effect upon home sales, urban planning and a shift to inner city living, as people flee the suburbs to cut their commute time and expense.
A new report, Driven to the Brink, issued by CEO’s for Cities, a non-profit group, points out the fact that high gas prices have been an overlooked factor when evaluating the reasons behind the housing crisis. The report finds that the decline in home prices has been more severe in metropolitan areas and suburbs that require lengthy commutes, and where there is a lack of public transportation.
That sentiment was also reflected in a poll of 900 Coldwell Banker agents. 96% of the agents surveyed reported that rising gas prices were a major concern for buyers and 78% said high fuel prices were driving demand for city living.
As real estate prices and sales volumes are studied, it certainly seems that the price of driving a car is changing the definition of location, location, location. Homes that are close to public transportation, jobs, schools and shopping are selling, even in today’s “buyers market”, as home buyers place greater importance on cutting gas bills and commute times.
What this means to sellers, buyers and investors is that people are looking at where the home is located in a new way. They are considering the price of gas and driving time before purchasing. Drivers paying $4.00+ per gallon for gas, do not take commutes for granted, nor will the allure of new construction, granite counters and stainless appliances pull them out to the suburbs, away from their jobs and schools.
In conclusion, gas prices are changing real estate values and the shift appears to be permanent. Vibrant cities with good public transportation have become a lot more valuable, while rural area’s and suburbs, built on $2.00/gallon gas, have lost their appeal. This shift is a tremendous opportunity for cities and developers who remix land uses, add higher density housing and better transporataion.
If you are selling or buying a home, you must understand the impact that gas prices have on the definition of location. You may quickly discover that the rising price of gas means living near the train station is the best thing for your bank account and your home appreciation.