May 2, 2008 Gas Prices Contributing to Bursting the Housing Bubble?
Are increasing gas prices to blame for the bubble bursting in the housing market? According to a recent report conducted by the Ceos for Cities organization there is some relationship between gas prices and the housing market. Or more specifically, they claim that the price of homes in the suburbs is being forced to come down because people can’t afford the increase gas costs…so they either need cheaper suburban homes or live closer to work.
The collapse of the housing bubble, punctured by the gas price spike, marks a watershed point for the nation’s suburbs. When gas was cheap, buying a house in a distant suburb where housing prices were cheaper seemed like an affordable housing choice for many families. But as the more severe decline in housing prices on the urban fringe over the past year illustrates, $3 a gallon gas has made low density development a false economy across the nation.
I don’t know if I buy into the complete conclusions of this report, but I think it does raise some important housing accessibility and affordability questions for policy makers. Is demand going to increase for more urban homes? But what about the argument that more affordable homes are in the suburbs? You can read the full study here: Driven to the Brink
Oh and another article in the Deseret News today about gas prices in Utah have hit another all-time high…$3.47 a gallon. Read the article here.