The next time your client moves, will reducing the distance between their home and work be an important factor?
- Yes! They will only rent or buy a property that is much closer to their work than their current property. (73%, 8 Votes)
- Sort of. They will prefer to move closer to work, but their commute is not a significant housing factor. (18%, 2 Votes)
- No! My clients are happy with their current commute time. (9%, 1 Votes)
Total Voters: 11
American thought too often aches for the past – the 1990s or earlier, to be specific.
The ‘90s were a time of cheap gas, prompting families to purchase large SUVs and trucks, and even larger suburban homes far from the centers of employment. This was before the doubling of the world’s labor force upon the entry of India and China into the global marketplace, hugely expanding their middle classes, and with them, the demand and price for commodities such as gasoline.
In those days, when forced to choose between a larger lifestyle in suburbia or living close to work and amenities, suburbia won again and again, led by zoning that propelled the massive suburban sprawl evident across California. “White flight,” it was termed at the time.
Flash forward to today, when the price of gas is more than double what it was 20 years ago, even in inflation-adjusted figures. With gas prices higher and likely to continue rising at the rate of consumer inflation over the long haul, suburbanites are quickly realizing the costs of living large. McMansion talk, if you wish.
To save money, Californians in large numbers will have to adjust their way of life, emulating the European model of fuel-efficient (and fewer) cars, and greater reliance on less expensive and more effective public transportation.
All of this adds up to urban living, a trend that will increase in California by necessity.
As Paul Krugman says, “If we’re heading for a prolonged era of scarce, expensive oil, Americans will face increasingly strong incentives to start living like Europeans – maybe not today, and maybe not tomorrow, but soon, and for the rest of our lives.”
first tuesday insight
first tuesday has long been a harbinger of the shifting trend from suburban to city living by the increasingly skilled and better educated among Californians – and gas prices are just another reason this will happen.
Currently at 54% and expected to dip as low as 51% this decade, the homeownership rate in California is low relative to national and historical levels. This means the rentier class will be the primary owners of property, while nearly half of all Californians will be paying them rent throughout their lives.
City dwellers find renting more affordable than buying, due to the increasing demand for prime-density California real estate and lack of proper zoning to encourage builders to add to the urban inventory (thus keeping prices at the replacement cost). Possession is acquired, remember, in one of two ways: by owning or by renting.
As the concentration of jobs in California continues its shift away from manufacturing towards technology jobs of all sorts, the new better paying jobs will be found in urban areas – not in the suburbs. A housing preference shift will follow these new jobs to the city.
Agents: consider your alternative locations. Focus your efforts in these profitable urban areas to ensure long-term success. Otherwise, you may discover your comfortable suburban FARM has gone to pasture, sought primarily by undereducated and low-skilled members of our growing population.
Read more on the shift from suburbia to cities:
Re: Stranded in Suburbia from the New York Times