Declining Home Value + Increased Cost Of Gas = Major Headache
Author: Charles Feldman • URL: http://www.thefeldmanblog.comJune 18th, 2008 •
In deciding whether to buy a home in a distant suburb, you may want to sit down and do some hard and honest calculating about the cost of gas for your commutes–a cost that is going up at the same time housing values are going down in many parts of the nation.
It is ironic, of course. Many moved to the burbs because they could afford homes there they could never have afforded in a major city. Only now, those people are taking a beating on two fronts: the shrinking value of their homes combined with the escalating costs of gasoline.
The California failure
Take California, where the mortgage mess/credit crunch has hit hard.
The Los Angeles Times reports new figures out showing home prices in Southern California falling off a cliff–down 27 percent in May from just a year ago. And, that’s an average. Many places in California are being hit even harder–with median prices falling 31, 42 and even 43 percent in the town of Victorville.
Meantime, the Times talks to one man who says he is now spending $400 more each month for gas that he did two years ago.
Even if gas prices decline slightly, the overall trend is upward. That means the cost of driving is, more than ever, an important part of the financial equation that must be looked at before deciding on that “cheaper” home in the suburbs.
If you are trying to sell your home in the suburbs, you may also be finding that there are fewer takers–not only because of the difficulty obtaining credit, but also because of the expense of commuting nowadays.
A bit of good news…maybe?
Many real estate investors and “experts” have argued that as prices continue to decline, bargain hunters will begin buying up all those cheaper houses.
For the most part, this has not happened yet on a grand scale because, while home prices may have fallen, being able to get a mortgage has become increasingly difficult, even for those with pretty good credit scores.
Yet, DataQuick tells the Times that in Riverside County, California–where the value of homes dropped almost 29 percent over a one year period, the “volume of homes sales in May of this year actually increased 4.1% from a year earlier…”
Worth keeping an eye on.
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Tags: California foreclosure, Economy, Foreclosures, housing, lending, mortgage mess, Riverside County, Victorville
Joshua Dorkin
Charles Feldman
Ted Karsch.
Troy Schuricht
Anwell Tsai
Richard Warren
Jim Watkins
The gas prices are unbeliveable! I recently had to quit a part time job because half of my pay check was consumed in gas prices. On top of considering what job to take based on the distance from your house, you may want to consider getting a smaller car.
This is a good topic to talk about. I think a lot of people are staying in their homes more and so they want their homes to be even more homier and closer to work, school, shopping and more. I know some people who have relocated either their job or their house to decrease the time to commute because they can’t live far away and still afford the type of house they want.
Certainly, expenses are a big factor…but what about the time lost? I grew up out in the country, and routinely commuted to “downtown” most of my life. I laughed at the city folk, especially those in the highrises and condos. Now, I live ten minutes from the office, and have no yard work, AND all the saved expenses. It’s like an extra two days of free time every week! And no stress sitting in traffic, plus low miles on the car means no repair bills either. I never thought I would say it, but you couldn’t PAY me to live in the ‘burbs now.
This is a very interesting topic. Living in a city where mass transit is an option gas is a concern but it can be avoided. Even though you have rising gas prices looking to alternatives could be an option
Yes gas prices are a big factor but, you may want to look at this link that explains how effectivley gas prices will fall to $1! It is not only enteresting but, also applies “sound economic” principles which puts the current gas problem into perspective. http://home-buddies.com/gas-prices-fall-to-one-dollar/