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.