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Gas Prices & Real Estate Values - Chicken, Egg, Issue or Non-Issue?

This weekend, the Arizona Daily Star ran an article that discussed increasing gas prices possibly affecting the price of homes in the suburbs. In the article, a few homeowners talked about how their cost of commute had drastically increased, impacting their lifestyle. Others spoke of the benefits outweighing the drawbacks. The article posed the question of gas prices possibly causing the price of homes in outlying areas to decrease.

While I read the article, I couldn't help but start debating the issue on both sides, always returning to the same thought: "This is really a discussion of lifestyle, and placing a monetary value on it." Some will place a higher value on one or the other side...is it really an issue that will play much in the marketplace?

I look forward to some discussion on this topic!

Kent Simpson

Specializing in Buyer Representation in the Tucson, Arizona real estate market.

"Never forget - Real Estate Is About People"

Posted by Kent Simpson REALTOR® and some other alphabet soup on 05/14/2008 11:51 PM

Comments (24)

gas prices, suburban life, real estate values

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24 Comments on Gas Prices & Real Estate Values - Chicken, Egg, Issue or Non-Issue?

MAY

2008

The high cost of gasoline already has some families cutting back on quality and quantity of food and cutting back on other discretionary purchases. I can't help but think that the cost of commuting will affect other lifestyle decisions.

At some point gas prices will have a huge impact. But they would have to get really high. In Europe gas prices are over $8/gallon and they have a lot of motorcycles and small cars. That may be change rather than everyone moving downtown.

yes u r right.

Gas prices WILL change the spending habits of many people. Gas by itself is a big expense for those who commute but the bigger picture is what fuel prices will do to the cost of everyday purchases and especially food. Cost to produce food especially on farms, then transport the food to stores and you can quickly see that food pricing will get hit even harder if the pricing of fuel and oil continues to climb. Colder markets that require gas or oil to heat their homes will see price increases and who knows where it will end.

Kent,

Drill in ANWAR! What's the problem? (and did Vishal text that comment in to your blog?)

Mike in Tucson

Vickie, Robert, Vishal, Sam & Mike - thanks for stopping by. I'm enjoying the variety of thoughts so far! Especially the creativity shown in texting in comments lol A new AR innovation?

KENT - At some point, it becomes a numbers game, just like any product. By that I mean, at what point does it become more expensive to live further away from a major city? Not just for gas, but also for all living expenses combined. Different people have different reasons for choosing where they live. In my area, you tend to get less for your money as you get closer to New York City. The commute from further out is more expensive, but similar homes are less expensive. If anything, I think that more people may look into public transportation or working closer to home. The only way that home prices will drop because of gas is if people set their sights lower because they cannot afford to buy gas and a home.

I see a definite correlation between gas prices and distance people are willing to travel... however it appears to be related more to the low end of the market as far as I can see.

MAY

2008

Cost of gas definitely impacts cost of living and therefore would impact the amount of home you can afford and where you can afford it. Of course it is a discretionary expense (to a point) and one could scale back travel outside of the work commute to help with the costs. However, I think a lot of it is psychological. For example, we hardly notice the small changes from week to week and so become desensitized to it. It is really only those people that are aware of the amount in total they spend on gas that may be affected. The truth is that home prices and sales in places where there is a lack of infrastructure or far from jobs (queen creek, el mirage, goodyear, etc.) are being hit and cost of commute may be one reason.

P.S. I would have loved to see the link connected to the article so I could have read the article as well as your blog.

Wait a minute... can I inject some more contraversy? OK... what's with the price of diesel? My goodness!

Increasing gas prices are impacting the things we need most, Kent. I've heard predictions from gas station owners of five bucks a gallon before the end of July.

Kent,

In our area, typical long commutes have really caused the more distant bedroom communities to flounder, while downtown Atlanta real estate is holding it's own!

This is directly related to the cost of gasoline.

MAY

2008

The rising cost of gas will affect all industries housing included.

MAY

2008

I've been super-busy the past 10 days, so I regret not getting back to the 'Rain to follow up on comments.
Adam, Chuck, Eric, David, Richard & Cameron - thanks for your input. Any other thoughts folks?

Chuck, I have to follow your lead on instigating some controversy (LOL): will ethanol-producing areas benefit or start rising?

MAY

2008

The price of gas is affecting the way I do business. I am giving out more referrals to other agents than ever before.

Howdy Kent

Seeing that New Hampshire and Vermont are both rural State's.

Most folk's here commute 36 mile and more, one way to work.

The cost of gas is dfinitely impacting folk's here. A long with cost of heating fuel to heat their home's in the winter.

I am paying $4.00 a gal. as of today. I do use the top grade of gas in my Jeep.

God Bless The U.S.A.

The cost of gas and groceries is having profound impact on the market here. I have never in my 17 years of real estate seen it this slow. I live in a rural area and my husband works in a local lumber mill in our home town. My office is 20 miles away. I have hooked up wireless internet in order to work more from home and not drive if I don't absolutely HAVE to go to the office. Home prices in our home town have always been less money than those in the larger cities. They are dropping in price like everything else.

It is a major issue. In the late 70's real estate values in the exburbs plunged! So did the value of getaway homes.

Melody - I'm being more selective in when and how often I'm willing to just drive over somewhere.

Dale - $4 a gallon already? I'll count my lucky stars we aren't there...yet.

Leslie - sorry to hear things are so slow for you--hopefully they'll pick up soon.

Jim - there are a lot of parallels to the 1970s in many different aspects.

MAY

2008

Kent - The rising cost of fuel was a small factor in my retiring. At todays rates that is about $500 a month I am no longer spending. It is fast approaching, and will probably exceed $1,000 in pre tax income that I do not need to have or could spend on other things.

MAY

2008

Howdy Kent

my friend

Thank ya for stopping by. I have written a response to your question.

Now heres something for ya to think about, this was said in Washington D.C.

Gas to be up to $7.00 a gallon by med. to late summer, up to $12.00 a gallon by winter.

God Bless The U.S.A.

MAY

2008

Howdy Kent

My friend is everything ok with ya ?

Ain't seen ya for a few day's now, in the rain community.

God Bless The U.S.A.

I'm here, Dale - thanks for your concern...just got caught up in doing other things non-work related for a change! Now about that $7 gas...we'll see it, but not real soon: nobody wants revolution in the streets!

MAY

2008

Howdy Kent

Thank ya for stopping by to visit.

I think some one dose, but it not anyone here in the U.S., I can't say who it is. Bot this has been in the works for some time. Even before the war. I was over there for the first one.

God Bless The U.S.A.

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