CNU Google Map: Urbanism's Advantage as Gas Prices Soar and Housing Market Sours
Economic, environmental concerns tarnish sprawl's appealSubmitted on 07/2/2008. Tags for this image:
New Urbanists have long known that Americans deserve communities that give them transportation choices. Suddenly, a seismic shift has occurred which appears to have validated this argument. Record-high gasoline prices has severely diminished the market appeal of suburban sprawl just as the easy-money mortgage machine, which made sprawl look so affordable, has shut down. Meanwhile, good urbanism has clearly demonstrated its enduring value even amidst the economic challenges.
As Bill McKibben writes in a Washington Post op-ed, "This spring, something just as profound and defining has happened: Pulled back by the inescapable gravity of higher prices and the growing scarcity of fossil fuels, we're starting a slow recoil into more dense and compact regions and localities."
Dozens of news reports are pouring in from across the country, showing that Americans are enthusiastically buying into urbanism. CNU has found dozens of news stories chronicling instances where sprawl's market appeal has waned (in some cases very dramatically), as evidenced by falling prices and residents' sentiments, while more urban homes retain their value. CNU has plotted many of these news stories on an interactive Google map:
A few new studies have appeared in short order that give credence to the numerous media reports. Mark Eppli and Charles Tu, who previously wrote "Valuing the New Urbanism" (the landmark 1999 study that found significantly higher price appreciation in new urbanist developments compared to their sprawl counterparts) have updated their study and found that the price premium for Kentlands (and its sister Lakelands) continued to grow during the recent real estate boom. Their unpublished paper finds:
After controlling for a series of characteristics... over the study period (1997-2005), the price of homes in Kentlands and Lakelands was 16.1% and 6.5% higher than comparable homes in surrounding conventional subdivisions, respectively... The price premium for houses in Kentlands over comparable homes in conventional developments is maintained or increasing over time, indicating a strong and sustained market acceptance... The market acceptance of Lakelands has strengthened over time as the price premium for housing units in Lakelands in years 2002-2005 was approximately 10.2% over comparable units in conventional developments, which is significantly higher than previous years.
David Stiff from Standard & Poor's, a major credit rating agency, finds evidence that choice locations in several metro areas, particularly those with a balance of jobs and housing and better mixed uses, are retaining their value and predicts that sprawling parts of the metropolitan edge will continue to decline. His report concludes:
Because of the reversal in trends that boosted demand for housing in outlying suburbs, since they peaked in 2005 and 2006, home prices have generally fallen more in towns and neighborhoods located farther away from urban centers... [E]ven as overall sales volume drops, relatively stronger demand for housing will limit price declines in neighborhoods with shorter work commutes, better schools, and easier access to parks, recreation, and retail centers. Because of sharp increases in gasoline prices, living closer to work has become an even more important consideration in the location decisions of homebuyers. When combined with large inventories of unsold housing on the edges of urban areas, this shift in preferences will mean that prices for homes in outlying neighborhoods will continue their more rapid decline and will be slower to rebound when housing markets finally start to recover.
Joe Cortright, in a report written for CEOs for Cities, writes that "the gas price spike popped the housing bubble" by exposing the false economy of sprawl, while noting that cities with stronger centers have fared better in the marketplace.
[M]etropolitan areas with more vital urban cores have fared much better in the face of the housing downturn than metro areas with weak core neighborhoods. And in most markets for which there is a relationship between geography and price declines, more sprawling areas have seen significantly greater declines.
The collapse of the housing bubble, punctured by the gas price spike, marks a watershed point for the nation’s suburbs. When gas was cheap, buying a house in a distant suburb where housing prices were cheaper seemed like an affordable housing choice for many families. But as the more severe decline in housing prices on the urban fringe over the past year illustrates, $3 a gallon gas has made low density development a false economy across the nation... the gas price shock signals more than just a temporary disruption in housing markets.