Today’s focus is on an analysis of the impact of gas fuel costs on where home buyers chose to live. The report’s general conclusion was that higher gas prices had little effect on house prices or commuting choices in the short term but rather on the amount of new homes built in remote areas with longer commute times. Although the report was written during the global economic downturn that also reduced gas prices, a return to record high fuel prices in 2011 has stimulated a new look at this question which also points to the impact of other potential commuting costs such as with road tolls. Also, another question arises as to the impact of higher commuting costs not only on home location but on containing sprawl around cities- a question that remains to be answered.
Key Quotes:
“Rising gas prices increase the cost of driving to work, which should make some individuals choose to live closer to their place of work than they would have otherwise..[but] households spend [only] between 3 and 4 percent of total expenditures on gasoline in the typical year, and these expenditures include non-commuting travel”
“the costs of housing adjustment amount to roughly 15 percent of house value, which would be about $30,000 at the median house value in 2008. This cost is more than 10 times larger than average gasoline expenditures in 2008, which were $2,715”
“a 10 percent increase in gas prices leads to a 10 percent decrease in construction after 4 years in locations with a long average commute relative to locations closer to jobs, but to no significant change in house prices”
“we do not find that house prices in outlying locations to respond to gas price changes differently than house prices in more urban locations”
“housing supply in most areas is elastic enough for gas prices to affect the quantity of housing but not the price”
“Because housing is durable, the resulting change in construction has a long-lived impact on the spatial distribution of housing units”
“Reducing commuting distance by living closer to work is only one of the variety of ways in which households can adjust to a change in gas prices…. driving a more fuel-efficient car, carpooling, or taking public transportation, should reduce the effect of gas prices on households’ location choice”
Related articles
- How Much Economic Activity Did High Gas Prices Destroy This Year? (businessinsider.com)
- How Gas Prices Affect The Economy (sfgate.com)
- How to Beat The Rising Gas Prices (socyberty.com)
- Forcing gas prices lower a subsidy for wealthy drivers (theglobeandmail.com)
- Study: Are gas prices changing home buying habits? (autoblog.com)
- High Gas Prices Trigger Changes in Buyer Behavior (derrickdawson.wordpress.com)
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