A report released by CEOs for Cities, a public policy organization with a focus on today’s U.S. cities, says that the higher costs associated with commuting are affecting America’s suburban housing values.
Authored by economist Joseph Cortright, “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs,” finds that declines in housing prices “are generally more severe in far-flung suburbs and metropolitan areas with weak central cities … (due to) the dramatic increase in gas prices over the past five years.”
The study examined neighborhood housing prices in five cities, including distant and closer-in suburbs. “In each case,” the report says, “housing prices fared worse in the more distant neighborhood.”
The full study shows changes in median single family housing prices between the fourth quarter of 2006 and the fourth quarter of 2007 in five metro areas – Chicago, Pittsburgh, Los Angeles, Portland and Tampa – according to distance to the center of each region’s central business district.
Prices declined most in the most distant suburbs, according to the analysis. “On average, over the past twelve months, the decline in a neighborhood 12 miles from the center of the business district is two to four percentage points greater than the decline in housing prices in neighborhoods two miles from the central business district.”
Because suburban commuters spend a greater amount on transportation and gas, their budgets have been harder hit, leaving less income to spend on housing, according to the study. Second, higher demand for houses on the suburban fringe is helping to boost prices, while the opposite is now often the case with houses in the outer suburbs.