Chart on housing prices against gas prices from the CEO’s for Cities report, Driven to the Brink (2001 recession shaded)
If you look back over the last two weeks at what we’ve been pointing to in the news and circulating on the blog, there was a clear trend emerging: Rising gas prices and escalating transportation costs have fundamentally altered the housing market in suburbs and distant neighborhoods where driving is the only option. While also helping to preserve and even enhance the value of neighborhoods in center cities and nearby places with good transportation access.
In just a week or two here on SGAA, there were…let me count…one, two, three, four, five, six significant stories posted regarding the impact of transportation and energy costs on the housing market. There would have been a seventh post if I had gotten around to it on Monday, when CEOs for Cities released a new report from economist and researcher Joe Cortright.
They go a step further in the report “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs” by claiming that gas prices have not only slowed down exurban housing growth and affected values, but were implicit in the collapse of the housing market.
From the CEOs for Cities press release:
“The popular narrative on the collapse of housing prices has only blamed exotic lending practices,” said Cortright, “but the much more important story is about how higher gas prices have re-drawn the map of urban real estate values. Vibrant central cities just got a whole lot more valuable.”
The analysis found that while there is overall weakness in housing prices, price declines are generally far more severe in far-flung suburbs and metropolitan areas with weak central cities. The reason for this shift is rooted in the dramatic increase in gas prices over the past five years. Cities and neighborhoods that require lengthy commutes and provide few transportation alternatives to the private vehicle are falling in value more precipitously than more central, compact and accessible places, the study shows.
What makes the report so valuable, however, is that they don’t stop at merely pointing out that suburbs are struggling while city neighborhoods are holding their value. Cortright offers some concrete policy recommendations that will help make housing more affordable, while increasing the availability of housing in places where homeowners can have more options for getting to work, school or the grocery store than filling up the car with 4 dollar gas.
CEOs for Cities President and CEO Carol Coletta offers a broad outline of how to begin addressing the problem:
“Public policy must recognize the new realities by changing land use planning and investment to encourage re-use of existing urban land and less driving. In this new world of high gas prices, strengthening the urban core is not only a matter of civic pride. It makes financial sense for America’s families.”