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What do you think? No effect whatsoever? The furthest outlying areas will decline a bit, become less desirable? The inner cities will see a spike in prices? Home builders will re-focus on the inner city?
If all things stay the same, and gas prices rose, it will most likely have an across the board affect on the economy, including real estate. Real Estate is an immovable; therefore, one must travel to the product. Even though it can be sampled, it just doesn't work that way in the end.
"...The furthest outlying areas will decline a bit, become less desirable?"
Location, location, location...
What will higher prices do to in and out migration? I think it may hurt the inner cities more. Cities, or larger metros typically rely on funds flowing in from outside the economic area. An across the board affect is still most likely, in my opinion.
I think higher gas prices will have people comparing the cost to own a house where the commute is longer (and there's no cheap, reliable mass transit) to the cost to own where the commute is shorter and saves gas.
If all things stay the same, and gas prices rose, it will most likely have an across the board affect on the economy, including real estate. Real Estate is an immovable; therefore, one must travel to the product. Even though it can be sampled, it just doesn't work that way in the end.
"...The furthest outlying areas will decline a bit, become less desirable?"
Location, location, location...
What will higher prices do to in and out migration? I think it may hurt the inner cities more. Cities, or larger metros typically rely on funds flowing in from outside the economic area. An across the board affect is still most likely, in my opinion.
Oh yes. Good point. That could affect commercial RE in the inner city areas more than it would private home sales, don't you think?
I know that right now there's a proposal from one of the cities near me (where my place of business is located, actually) to impose a payroll tax.
I think higher gas prices will have people comparing the cost to own a house where the commute is longer (and there's no cheap, reliable mass transit) to the cost to own where the commute is shorter and saves gas.
So, yes. I do think it'll have an effect.
I am in the process of buying and this was a bigger factor in deciding location than it would have been even just a year ago. I had originally been interested in a great little town that was further out, but an extra $10 in gas for the commute adds up quick and who knows how much more that commute is going to cost further down the road.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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An additional dollar per gallon, say $4 to $5/gallon means $2 a day more for a 30 mile commute in a 30 mpg vehicle. To many people that is well worth it to be in an affordable home in a safe area. I don't expect the home prices to be significantly affected by gas prices, I do expect to see
a lot more sales of economical vehicles. My truck is sitting most of the week now as I commute in a little 4 cylinder 5 speed car.
At least in my city, downtown isn't the only major employment center. The suburbs have quite a bit of employers as well (i.e. people living in the 'burbs work in the 'burbs too) so I'm sure buyers will take location into account, but I don't think there will be as large of a shift in preference toward downtowns/urban centers as some people seem to think.
What do you think? No effect whatsoever? The furthest outlying areas will decline a bit, become less desirable? The inner cities will see a spike in prices? Home builders will re-focus on the inner city?
Will it spark a "return to the inner city" trend. Probably not. The 2010 census shows that the majority of growth in most metros is still in outlying newer suburban areas.
When the market is down, people are looking for more value, and expensive trendy city neighborhoods rarely have much value to the majority of buyers. The majority of home buyers still are married couples with children. Schools in most cities are still lousy compared with outlying areas. So a higher priced house and private schools are far more expensive then gas.
Gas prices are only one factor in many people's minds. Also not everybody works in downtown areas, most people in most cities actually work in the suburbs, so a city neighborhood has no advantages to most people.
Places with few jobs will see decreases. Most outlying areas are the places where most new jobs are created.
That could affect commercial RE in the inner city areas more than it would private home sales, don't you think?
Speaking for my area, commercial properties are pretty much stagnate. Existing leases are over priced, in my opinion. In any given market area, to say which market will be hit the hardest, is a difficult decision to make without any additional studies of the specifics (economic base analysis and neighborhood analysis'). Economies need time to adapt, so the time period of commercial having a worse showing statistically is all within time frames and different cycles. In my opinion, commercial real estate has an ability to be worse off than residential at a certain point of beginning. Even for my area, I would have to put together a study, which will include many outlaying areas as "economic neighborhood boundaries)
Commercial properties are an entirely different animals. No more economic than the residential market, but there are additional (complex)variables to consider.
The commercial market makes up for not being a necessity by being able to reinvent itself. Residential property is a necessity, but supply and demand is what it is. Overall, I think many ratios can be found, and some will be positive toward commercial and some positive toward the residential market.
Inner cities have residential improvements, as well. So, there are two areas where residential improvements are located. Same for commercial. Specific type of commercial properties will get a whiff of the change mentality of in and out migration, and these properties can be more successful than private home sales (accounting for both areas). For example: the outlaying areas in my area are demanding dollar general stores (miniature wal-mart) -- this saves on gas and time. The houses in the inner cities are closer to city amenities, so in time it may be logical to assume that some of these assets will be absorbed, especially when baby boomers are retiring, and the next generation work force is immensely lower than the baby boomers. Outlaying areas can attract retirees. Commercial properties provide subtle complements for the out laying areas ('use' specific)
The whole question is based on one single cause (higher gas prices). It would be nice to know or be confident in the anticipated estimated raise in price. Have an economic base analysis, and neighborhood market analysis' If all else stays the same, knowing these specific market conditions. demographic, and facts, will assist with a better vision; a better sense of the near future can be ascertained.
I truly believe both markets have the ability show volatility more so than just one market boasting the worse record of performance (switching places according to performance).
I apologize for a late response. We were slammed with work in the latter half of last week.
With this have-a-job-gone-tomorrow work environment today, I chose a central location, for being equi-distant to all areas of the Valley. Say, you move to a far northern region of your metro area for a job, you lose your job, your next job takes you to an opposite region, you're looking at a long commute, and the potential difficulty of selling your house.
I prefer a central location because of the flexibility it offers. No one else is thinking along those lines, or am I the only one?
I don't really sweat losing my job today, due to unpredictable gas prices, a 10 mile commute, as my next job will more than likely be a 10 mile commute in another direction.
I've known of those who moved to the far NW area of this city, lost their jobs, and with the limited selection of jobs, were forced into a long commute to the SW part of the city.
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