Suburbs Are Hurting From Birth Rates and Gas Prices

A recent N.P.R. report about housing prices in D.C. shows the close link between driving costs and the housing market.

According to the report, home prices in the suburbs have fallen 18 percent while those in the District have risen 11 percent.

No doubt some of this difference is due to a change in demand toward the District resulting from reduced birth and marriage rates and a lessened desire to be in the suburban school districts.

Part of the change in demand, though, has come from the big increase in gasoline prices. High gasoline costs increase the cost of living far from downtown, so the demand for suburban housing drops.

Especially strong evidence for this effect is provided by a comparison of housing prices near D.C. Metro stations. In the suburbs, those prices have fallen less than average, while within the District, house prices near stations have risen more than average.


Vadim

If the monocentric city model holds true, utility has to stay constant. The high cost of gasoline would lead to a cheaper houses in the suburbs. Thus, the demand will come back and the market is stabilized.

Traciatim

I wonder if this will lead the the gentrification of major cities and turn the suburbs in to the 'poor folk' over the course of the next generation or two as transportation costs increase, or if it will simply lead to more mass transit solutions and alternative transportation developments (like car sharing, etc) in order to keep the suburbs how they are now.

SM

DC is in recovery from decades of mismanagement and a crack epidemic. I'd bet crime rates caused some of the price changes in DC. Also, wealthier people will substitute travel on the relatively plush Metro trains for the cheap but slow bus.

This trend in the district has been ongoing for at least a decade, during N.VA's exurb expansion and before gas costs became acute. In that time many new Metro stops have opened, which could help identify the other reasons housing prices have changed.

Colin

"...while the D.C. public schools are some of the lowest-rated, least funded schools in the country."

You're correct about the former but not the latter:

http://www.examiner.com/a-1315414~D_C__schools_rank_third_in_nation_in_per_pupil_spending__census_says.html?cid=rss-Washington_DC

Christina

Mike - I think that a lessened desire to be in suburban school districts is due to lower marriage and birth rates. In regards to the article - DC has also experienced a major shift in demographics in the last decade. There is a constant influx of young professionals these days which seems to be greater than in the past. Also - DC is revitalized and living in the city center is getting better and better by the day (i.e. more restaurants, coffee shops, etc).

David Heigham

In every city that I have looked at (all the looks have been informal and as guides to my personal decision-making), the downward gradient of prices in the suburbs from the centre has been best roughly summarised as a multiple of the annual commuting cost. The fullest study I did gave a significant and stable 7 times commuting cost for London; but I have not re-done that in the last twenty years.

elvis

i love it !
the chickens have come home to roost.
say goodbye to the great american dream machine .
hahahahahahahahahaha !!!!

paanta

There are lots of pro-transit folks (myself included) that would love to think that high gas prices are going to drive people back into urban cores. However, making a correlation between housing prices and transit proximity and then leaping to conclusions about gas prices is a bit of a stretch. It's just too easy, and the most obvious result of a gas price crunch would be a _huge_ increase in the purchase of small cars. Buying a new car is much easier than moving!

Are the areas around transit tend to be more heavily dominated by rental housing? Is the rental market more insulated from foreclosures than owner-occupied market? Are there other links between owner and renter occupied housing that might be playing into this? What about the sort of employment people in urban cores have, compared to suburbanites? Are their key industries doing better or worse? Is transit ridership up or down?
What about cities with nice urban areas and inferior public transit? Are they seeing the same pattern...larger real estate price declines in the suburbs?

My guess is demographics and shifts of perception are _much_ bigger factors than gas prices. People in my parents' cohort who lived through the '67 riots wouldn't even consider moving into a big city, while none of my peers are particularly keen on moving out to the suburbs.

Read more...

Mike

My only comment, as I live in a D.C. suburb (without kids) is that the comment that there is "a lessened desire to be in the suburban school districts" is flatly wrong. Fairfax County has some of the best, most well-funded schools in the country, while the D.C. public schools are some of the lowest-rated, least funded schools in the country. Although Mayor Fenty is trying to improve the situation, it is a dire one indeed, and I have yet to meet a single couple with kids who has moved to the District - most move out when they have kids, or pay for private school. Only the truly desperate leave their children in D.C. public schools. Other than that, I, and many others, would love to live in the District.

Chris Frampton

There was a great article abot this in the Atlantic Monthly written by Christopher Leinberger and entitled, "The Next Slum?" I'm not sure how to link from here, but it's worth seeking out. I'm no economist, but as a real estate developer, I'm also convinced that the phenomena of "walkable living" is not only a result of decreased birth and higher gas costs. Commuting times have reached some sort of barrier, people just don't want to drive so much and, if they can, they'll live in a place where walking is a real possibility and even driving only means short commutes.

W P Gardner

I believe it, but it sounds too good to be true. (I live in Berkeley, CA near a BART station and I take BART to work.)

The more money that people pay out on gasoline, the less they have to pay on mortgage interest. I doubt whether people think of that ahead of time when they buy a house, but over time it must drag down the attraction of big exurban McMansions.

Derek Giromini

In the Chicago suburbs, one factor in the price of a home is the distance to the suburb's core, which is usually a small downtown with a Metra train station that facilitates commuting to Chicago. At a given price point, a house that is 10 blocks away from the core might be slightly bigger and in better shape than a house that is 5 blocks away from the core.

BW

I live in DC (Capitol Hill) and send my kids to public schools. I'm not convinced they're any worse than the very expensive private schools around, though, like with most schools, quality varies depending primarily on the teacher.

One thing that DC offers, perhaps more than other cities, is a good degree of choice. There are many charter schools that provide free alternatives. Also, you can apply to attend public schools for free in other parts of the city. So if you're not happy with your local school, you're not locked in. My impression is that one's options tend to be more limited in the surrounding suburbs.

Mitch

The "lessened demand" is a function of fewer families that demand access to good schools, not families demanding less access to good schools.

Don't underestimate DC's legendary traffic in all of this either. It takes a loooong time to get just about anywhere via auto.

Tony

People in the suburbs tend to have a bad case of the SPENDS when it comes to nice homes in the suburbs. Higher gas prices have some that really cannot afford these homes ready to scatter like rodents. I'm close to NYC and the area is starting to evolve as I expected, you have a nice homes but who wants to keep sitting in traffic?

Island Press

For more about the trend away from the suburbs and to the cities, read green development consultant Chris Leinberger's take at http://blog.islandpress.org/author/christopher

Or, read his book, The Option of Urbanism: http://islandpress.org/bookstore/details.php?isbn=9781597261364