Here's a real-estate tip: Buy downtown. In many cities, prices have already bottomed out and are holding steady--or nudging up. The same can't be said for the suburbs.
In fact, commute times to downtown areas are turning out to be a direct predictor of how far home prices have fallen--and how far off a recovery still is. The longer the commute, the bigger the drop.
High gas prices alone don't explain why many people are moving closer to work. But they're giving many Americans a painful reminder that long commutes carry aggravations that ultimately didn't justify saving money on a house: the weeks spent every year sitting in snarled traffic, the mortal peril of congested freeways, the maintenance and fast depreciation of your car, and so forth.
Will gas prices spurn a change in housing development? Read after the jump.
David Stiff, chief economist for the company that produces the Case Shiller Home Price Index, says that most Americans have abandoned the old maxim, "Drive until you qualify." And developers that were lured to nether regions of metropolitan areas by cheap land and rising home prices have been burned badly.
Foreclosure rates spike the further away from downtown metropolitan areas you go. This can partly be explained by people who were stretching to the very limits of their budgets in order to buy a house. Variable rate mortgages--and high gas prices--are pushing many of them over the edge.
Will gasoline prices prod a fundamental change in the ways that communities are developed? Several organizations, includingSmart Growth America, are working with communities and developers to end sprawl. Public transportation will play a significant role, especially commuter rails, which across the country have seen their ridership climb in the past year.
Photo: doratagold, licensed through Creative Commons
