Sunday, January 24, 2016

Gasoline Prices and Exurbia

by Bill McBride on 1/24/2016 10:46:00 AM

Here is a quote from an NPR article this morning: $1.22 A Gallon: Cheap Gas Raises Fears Of Urban Sprawl

"With the fall of gas prices, in a place like Columbus and most Midwestern cities, it really is going to encourage more sprawl," [Cleve Ricksecker, directs two Downtown Columbus Special Improvement Districts] says.

Sprawl can mean more traffic jams and air pollution. But he says only a spike in the price of gas would change the equation when people are making decisions about where to live and work.
Lower gasoline prices make exurbia more attractive (people have short memories), and we might see a shift to people buying homes with longer commutes.

In 2008, I wrote a post: Temecula: 15% of homes REO or in Foreclosure. I noted that Temecula was being hit hard by both the housing bust and high gasoline prices:
I remember visiting a friend in Temecula about 3 years ago. We were standing in his front yard, and he started telling me what his neighbors did for a living. "A mortgage broker lives there. A real estate agent there. That guy is in construction. Another mortgage broker there" ... and on and on. Over half of the households on his block were dependent on the housing market in way or another.

So it is no surprise that the housing bust is hitting Temecula hard.

But look at Temecula on this map. San Diego is far to the south - living in Escondido is a tough enough commute to work in San Diego. And Orange County is an even more difficult drive to the west. Imagine what $5 gasoline will do.
Here is that map. Now times are good in exurbia. The housing bust is over and gasoline prices are below $2 per gallon:


View Larger Map