Paul Krugman validates* what I’ve been saying to clients/readers/prospects for some time.
Any serious reduction in American driving will require more than this — it will mean changing how and where many of us live.
My belief is this – properties that are closer to urban cores – roughly defined as having a coffee shop/grocery store/park/gathering place – will appreciate at a greater rate than those that require more driving to get to said urban centers.
Using back-of-the-napkin math –
if when gas costs five bucks a gallon –
If driving to the store/work/etc costs an additional ten to fifteen dollars for those properties not close to urban centers, and the properties the are close to urban centers are able to save that gas money – isn’t it reasonable to conclude that that theoretical savings of three to five hundred dollars a month would then be applicable to one’s mortgage payment?
I am seeing a contraction of the geographic area I service, and clients are now asking more and more about bikeabilty, walkability and public transport. Higher gas prices are likely to impact our business in fundamental ways – among them –
– Business models – buyers pay up front or do more legwork on their own. Hybrid Redfin models or derivations thereof may become more popular and prominent.
– Denser suburbs and fewer exurbs
– Increased taxes – property tax and sales tax – to increase infrastructure, thus affecting affordability
– Fewer Realtors and real estate agents as more discover that the Realtor pot of gold is harder to find.
– MLS’s may have to change their restrictions on neighborhood and area photos and videos – consumers (and Realtors!) want to see more than what is currently offered. If MLS’ want to remain the primary point of contact, they will have to adapt and provide more. Including or excluding properties without physically visiting properties will be more and more important.
– More boutique brokerages will emerge and thrive as the cost of doing business becomes too great for many of the bigger brokerages.
When we are looking back at this recession in five years with the benefit of hindsight, what opportunities will we be thankful we took advantage of? What opportunities will we wish we had seen and seized?
A question for the Virginia Realtors – are you seeing this trend happen now? Are you seeing your market area contract due to gas prices’ precipitous increase?
Could Realtors use this opportunity to advocate for alternative methods of transportation in new developments? Just a thought.
* Don’t shut down as soon as you see Paul Krugman’s name. Sure, the NYTimes has a unique slant, but that doesn’t necessarily mean the information presented in this article is not relevant, applicable and true.