Gas Prices and the Housing Market – Part 2
Because of the amount responses I got from my previous post several weeks ago, “A King, A CEO and Gas Prices,” I have decided for the first time ever to write a continuation post. I got lots of great comments, some agreed and some did not. I think that the subject matter deserves a more in depth look, especially since the market is changing on an almost a daily basis.
As it was established in my last post, people often sacrifice the distance between their jobs and homes for a cheaper house. Several years ago this made perfect sense, considering gas prices were no where near what they are now. Even a 100 mile round trip commute could have been as little as $120.00 a month, seven to eight years ago. That same trip would now easily cost you upwards of $500 a month.
Freddie Mac even addressed this problem back in 2004. In October of that year, they announced and implemented a program for all of their 5,000 employees to purchase homes close to Freddie Mac work sites. Even though gas price were cheaper then, the reason for the program was to cut down the cost of the commute and other issues that come along with it.
According to MortgageNewsDaily, rising gas and energy prices will have a profound effect on the price to construct homes, thus affecting the cost of the home once it’s built.
In a recent piece by Climate@cnu.com, it is stated that the recent record-high gas prices have severely diminished the market appeal of the suburban sprawl. What all of this adds up to in the end is that houses that are further away from major downtown and urban areas are becoming less and less appealing to potential home buyers. With home prices down 27% from this time last year, in all of Southern California, according to the Los Angeles Times, areas such as Antelope Valley and the Inland Empire are quickly becoming less desirable. According to Christopher Leinberger, houses in these outlaying areas may continue to suffer even after the urban homes make a strong rebound.
