May 16 2008 7:53AM | Permalink | Email this | Comments (0) |
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Here's an interesting study (it's a 30-page PDF, so click with caution).

It says that rising gas prices have been the biggest factor in the housing downturn, driving down the values of homes in the suburbs:

The gas price spike popped the housing bubble. Growth in housing prices was fueled by low and stable gas prices from 1990 through 2004.

The authors predict that this is the beginning of a long-term shift of people moving back to the cities from the suburbs.

There's no denying the impact gas prices have had on every aspect of our lives. We're all cutting spending in other areas to make up for the prices. (I just paid $4.05 a gallon at lunch today, so you don't have to tell me. Those lunches from the cafeteria have been replaced with the frozen Lean Cuisine.)

That said, I'm not buying everything these guys have to say. First of all, the study was conducted by CEOs for Cities a group dedicated to the advancement of urban centers. They're obviously going to have an incentive for pushing the idea of city living.

Besides that, I think there are several reasons we won't see widespread abandonment of the suburbs. 

• Only 7 percent of consumers want to buy their next home in the central city, according to a recent NAHB survey. That's compared to 30 percent who want to live in close-in suburbs and 35 percent who want to be in outlying suburbs.
• This idea completely ignores that fact that in many metro areas, the city is no longer the center of employment. Here in Chicago, you see as many people commuting away from the city as you do toward it.
• While urban cheerleaders talk about the better quality of life in the city, that can mean very different things to different people. While they may offer museums, theater, restaurants, etc., they also offer more crime and inferior schools

I could go on, but you get the point. Don't get me wrong. I agree that gas prices have had a huge impact on our industry, both in new construction and remodeling. When people are spending thousands more a year on gas, there's obviously less to go around.

What's I do think we're going to see is a significant reduction of exurbs -- those former farm towns that have blossomed into mini cities and pushed metro areas to unreasonable sizes. We've reached a tipping point with gas prices that probably make those homes unaffordable for most people. (I talked some about this in the magazine this month, writing about my generation (X) and the Echo Boomers that are following us.)