As Gas Costs Rise, Buyers Look At Downtown Living
- Jun 19, 2008
Urban multifamily developers, start your engines: Demand is about to increase, and we have the astronomically high gas prices to thank.
Americans are looking at homebuying in a new light, according to an Associated Press article reprinted in the San Jose Mercury News today. They don’t want to commute–partially because of the time it takes, but more often, because it’s just getting too expensive to drive far.
Gas has risen by more than a dollar this year; this week, it hit a new high of $4.08 per gallon on Monday.
As a result, Americans are driving less. Compared to April 2007, we drove 1.4 billion fewer highway miles this April, and 400 million fewer miles than we drove a year ago in March, according to the Transportation Department.
Prospective buyers are well aware of how expensive gas is. A recent survey of 900 Coldwell Banker agents found that 96 percent cited rising gas prices as a big client concern.
And that’s giving urban living a big boost.
Eighty-one percent of the agents in the Coldwell Banker survey said clients mentioned minimizing their work commute as a reason for being interested in urban living.
That’s giving a boost to homes near "urban centers and subway, train and bus stops," AP says, which "are
often selling faster and at better prices than those in the distant
That’s not necessarily true for all downtown areas. Smaller cities and burbs that are too far to offer a decent commute are suffering. An article in today’s Boston Globe touches on the struggle cities like Franklin, Mass.–which is located more than 40 miles from Boston–are having to revitalize their downtown areas.
Mixed-use developments may offer Franklin residents the same quality of life and convenience a mixed-use development would offer a resident in a larger city like Boston–but it’s also going to offer them a hefty drive of an hour or more to commute if they’re working there.
This week, the Commerce Department said that multifamily starts fell 8 percent in May. However, multifamily permits increased 3.9 percent. Could urban demand be responsible for the rise?
It’s possible. In large U.S. cities, the urban housing market has traditonaly been dominated by multifamily structures because of space constraints and design. It just makes sense: With a higher population, you need a bigger amount of smaller homes.
We know overall housing demand has been rocky for some time. But if we know that demand for one sector–urban multifamily properties–is beginning to vastly increase, how should the industry prepare?
Should we be planning more rental properties? Increasing the offerings in mixed-use condo projects–adding restaurants, coffee shops, gyms and other neighborhood-enhancing items that will let residents walk where they need to–to increase their draw?
Should the design of new downtown multifamily structures reflect some of the convenience suburbanites are used to–such as ample parking and open space?
Or will the location alone–and shorter or nonexistent commute–be enough to lure residents from the suburbs?