Home prices are falling faster in suburbs than in most big cities, according to a new study by Fiserv Lending Solutions Chief Economist David Stiff. Rising prices during the real estate bubble forced many buyers into distant suburbs, where land was cheaper. But now many of them now are losing properties to foreclosure. (Seattle Post-Intelligencer). And soaring gasoline prices and other factors are helping to boost demand in urban areas as people look to cut commuting costs. (The New York Times)
What the commentators said
Americans got away with treating “smart growth” as an academic exercise for years, said the Hartford Courant in an editorial. No more. “The prospect of gas going to $5 a gallon and beyond" should force everybody, especially state and local governments, to say no to the sprawl that makes commuters waste fuel getting to work. It's time to “embrace a smart growth policy that encourages workers and companies to move to sites in town centers or on transit lines.”
The market will drive people out of suburbs if nothing else does, said Michael Corkery, Sui-Lee Wee and Nick Timiraos in The Wall Street Journal. Home prices have finally fallen enough to make them affordable again, but $4-a-gallon gas adds hundreds of dollars a year to commuting costs for people in far-flung suburbs. And if gas prices stay this high for a long time, property in some outlying areas will become, in the words of Deutsche Bank analyst Nishu Sood, “effectively worthless.”
The coming death of the suburb is shocking news for baby boomers, said Will Bunch in The Philadelphia Daily News' Attywood blog. “We grew up taught to think that suburbs were like a part of human evolution. I never thought the American Suburb would be the one to go first.”
The exodus from the suburb to cities is no sure thing, said Chermelle D. Edwards and Prashant Gopal in BusinessWeek.com. Cities came roaring back during the real-estate boom, but urban redevelopment came to a screeching halt in many places when prices stopped soaring. And downtown areas still have violent crime and other problems that the well-to-do moved to the suburbs to escape, so not everybody is ready to move back.
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