High gas prices are a hot issue affecting today’s economy, including the real estate market. Before gas prices rose so dramatically, many home buyers opted for suburban homes with big yards and lots of space. Commuting time and gas prices were not as much of a concern. There was an emphasis on suburban home buying and the “white picket fence” depiction of family life and perfect home living in the suburbs. People at the time strove to get a job, make money, start a family, and move away from the city into a nice home with a big yard where you could host parties on the deck and let your children play. But, with rising gas prices is that suburban “white picket fence” lifestyle history?
About a decade ago, it was financially a good idea to pay for gas at $1.25 a gallon in order to commute to work than living in downtown areas closer to work but with a higher cost of living. And, at the time, there were more perks to outweigh the fact that suburban homeowners had to spend more money on gas [1]. Suburban living provided more privacy and open space for families and thought to be more ideal for raising children. Dealing with traffic and commuting was only a small part of daily life, while city dwellers lived in the hectic lifestyle 24/7. Even if they were not driving, but walking, there was constant noise and chaos from the surrounding environment.
Suburban homeowners only had to think about traffic and commuting for a small portion of their day, going to work and coming home. Downtown homeowners had to constantly think about what roads to take to avoid traffic; where and when they can park their car before it’s so packed on the streets that they cannot find a parking spot. And, they would also have to be aware of the people coming into their neighborhood and living space for work and entertainment. But, now with gas prices above three and four dollars nationwide, commuting time and location has become a much bigger impact on home buying.
Many people are looking into moving into the downtown metro areas to avoid their commuting and gas price woes. Suddenly, people are willing to trade in their privacy and larger living space for shorter commute times and less money spent on gas. The real estate market trends are evidence to back up this claim. In a survey of 900 Coldwell Banker agents, results showed that 96% said that rising gas prices were a concern to their home buying clients [3].
Of course that doesn’t mean that they would rather live in the cities than the suburbs; it could mean they still want to live in the suburbs but with a shorter commute time than they already have. But, from the same survey 78% said that higher fuel costs are increasing their desire to move out of the suburbs completely and move into the cities [3]. Home prices out in the suburbs nationwide are decreasing as the demand for them drop, and homes in close proximity to train stations and public transportation have become relatively more expensive and sought after due to current gas prices.
This home buying change results in new condominiums being constructed in downtown cities to accommodate the demand for more urban living. Experts are even saying that we need to prepare for a “city of the future.” There’s going to be a bigger focus on central city living and more public transportation services. Instead of homes and neighborhoods being extended horizontally farther into farmlands and country sides, neighborhoods will be vertical as condominiums and tall skyscraper buildings will be essential in providing many homes and businesses in small, but centrally-located, areas [2].
Although, many realtors are already aware of this switched-location focus, it is going to change the way of selling homes drastically. Realtors had a fixed way of marketing and selling homes because they knew what their consumers wanted and for a long time it did not change. It will be interesting to see what advancements and changes the real estate market will go through to familiarize and adjust to this changing trend that seems like it’s here to stay for quite some time.
References:
[1] www.newsweek.com
[2] www.realestate.msn.com
[3] www.cnn.com
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