A fundamental belief at Tri-State is that land use planning and transportation planning are intrinsically linked, and that the failure to consider them in tandem has resulted in many of our current mobility problems. The current housing foreclosure crisis, and its reverberating impacts, may be another unexpected consequence of this failure.
While sub-prime loans have taken the brunt of the blame for the housing crisis, some analysts are examining the role that skyrocketing gas prices have played in decreasing home values, particularly in automobile-dependent suburbs and exurbs.
A recently released report by CEOs for Cities, a national network of elected officials, civic groups, corporate executives, and others, makes this argument. Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs, analyzes the housing bubble collapse and links it to a rise in energy costs and sprawling development that places homes further and further away from downtowns.
The report finds that “the higher price of gas has most affected suburban housing values… distant suburbs have seen the largest declines, while values in ‘close-in’ neighborhoods have held up better, and in some cases continued to increase.” (In the table below, “distant” neighborhoods are 13 miles from the central business district, while “close-in” neighborhoods are 3 miles away.) This is hardly surprising, considering that sprawling development patterns lack the density to efficiently support mass transit and are often hostile environments for pedestrians and cyclists. For many residents of these areas, the only viable option is the automobile, even as it becomes more expensive to drive.
According to an April National Public Radio news report, housing prices have actually gone up in many areas with transit options. For example, home sales increased by 10 percent in the 20912 Zip Code of Tacoma Park, MD, over the last year. Tacoma Park, a “close-in” suburb of Washington, DC, is serviced by the DC Metro system and has reliable bus service. By comparison, Ashburn, VA, a more sprawling suburb located approximately 40 miles from the center of DC, saw home prices drop by up to 18 percent in the same time period.
In the New York metropolitan area, the pattern of strong-performing cities and weaker exurbs seems to hold. Zillow.com’s index of home values shows, for first quarter 2007 to first quarter 2008, large increases in home value for most of Manhattan, Brooklyn, the Bronx, and western Queens, as well as regional urban centers like Newark, White Plains, and Mount Vernon. Weaker performance was seen in eastern Queens, Staten Island, and Long Island. Home values fell most sharply in the exurbs of Rockland County, north Westchester County, and northwest New Jersey.
As this trend occurs throughout the United States, at least one mainstream pundit, NY Times columnist Paul Krugman, is asserting that development around transit is the wave of the future and that the United States should be looking at mixed-use development patterns in Europe to help reduce its congestion, sprawl and housing problems.
In order to get there, governments will have to de-emphasize road expansion projects that promote sprawling development, and focus on maintenance of existing road infrastructure and expansion of urban and commuter transit. NJDOT, for example, dedicates most of its road budget to repair instead of expansion, and runs a formal “transit village” program that incentivizes compact, transit-oriented development. New Jersey supports these goals through laws including the Urban Transit Hub Tax Credit Act passed in January. Connecticut and New York, though interested in TOD, are far behind in their efforts. By following New Jersey’s lead, they can promote sustainable solutions to congestion and reduce sprawl — and might end up bolstering the housing market as well.
Table: From Driven to the Brink. Percentage changes are based on a regression analysis of ZIP code data. “Last 12 Months” = fourth quarter 2006 to fourth quarter 2007. Regression analysis of more recent data is unavailable, but in the first quarter of 2008, median U.S home values continued to fall (according to the Case-Shiller Index and Zillow.com) while the price of gasoline continued to rise.