When gasoline costs $5 a gallon, and diesel $6, who is going to buy a house in the exurbs?
With those fuel prices appearing inevitable within a year or two, I have been posing that question in casual conversations with people. Their answers is, well … no one.
During the housing boom that now feels like a lifetime ago, the mantra was "drive until you qualify." If you couldn't afford San Diego, you drove up I-15 until you found a subdivision that fit your budget in a place like Lake Elsinore or Perris. If you made $70,000 a year in Silicon Valley, you headed out 580 to Tracy or Manteca in the Central Valley. If Sacramento was too expensive, you drove 45 minutes north to Yuba City.
All of that driving seems less feasible with every passing day.
Recent figures released by the California Building Industry Association indicate that housing construction, which is slow everywhere, may be slowest in these exurban areas. In the last few days, we've seen news reports that prices in even relatively close-in suburbs have fallen much farther than prices in central cities — and may not rebound for a long time.
The Wall Street Journal reported on Tuesday that while prices are holding fairly steady in San Francisco proper, "Alameda and Contra Costa, across San Francisco Bay from the city and chockablock with anonymous tract housing, are down 18% and 27%, respectively. Bargains exist, but with so much inventory, prices aren't expected to rebound quickly."
A few days ago in a Los Angeles Times story, Stuart Gabriel, director of UCLA's Zimer Center for Real Estate, questioned the still-planned development of Newhall Ranch because it is too far from L.A. job centers.
"Residential development in the future is going to look different than in the past. We're in a new energy price environment," Gabriel told the Times. "The emphasis is going to be on reducing commutes and carbon emissions."
In a commentary arguing against a federally funded housing bailout, the Wall Street Journal's Holman Jenkins Jr. makes this observation: "A real quandary for policy makers may soon be how to handle the subprime debris – the physical waste – of housing complexes far from town, unwanted by anybody with the wherewithal to maintain them."
In other words, what smart growthers have been pushing for years — infill, redevelopment, density, and housing near transit — may become a reality not because of careful planning, but because people can't afford to fill their gas tanks twice a week.
– Paul Shigley