Gas and real estate

By Fester:

Tim at Balloon Juice has a very astute and incisive observation on the trade-offs that suburbanization has encouraged and how the back end of that trade will snap back at us:

That lead time was an opportunity to make changes. Some would have been painful and some merely sensible, but it would prevent huge numbers of honest Americans get caught with their pants down. Instead we blew it out the tailpipe of cars that average 15 MPG. Now, instead of a planned transition, we get to see what happens when stubborn denial meets inescapable change. It’s simply unsustainable to live in suburban car country with a negative equity on the house, $6-7 gas (wait until you see what that does to property values in outlying suburbs) and expensive SUVs that nobody wants. The saddest thing for me was that most who will get fucked the worst had no idea this was coming. There was that one guy who warned us, but he had a snooty laugh

The tradeoff was that the combination of cheap, individualized transportation, under-priced roads and positional games on the educational system encouraged dispersion at the cost of hollowing out the central cities and the medium to high density inner suburbs.  Cheap transportation and roads opened up new areas for settlements on then fringes of metro areas and did so at significantly lower costs than settlements within existing urban boundaries. 

This was deliberate policy on the cheap, individualized transportation and underpriced roads portions as there is a reliable uproar whenever a proposal to raise the gas tax is made or when the vehicle registration fee is changed to compensate for budget crunches and on the general (but waivable) prohibition from tolling the interstates highways.  We have seen this uproar over the Pennsylvania proposal to toll portions of I-80 and the recent defeat of the New York City congestion traffic charge policy.   The last core policy element, local educational control, allows for significant fragmentation of community quality and tax bases.  Local educational control results from a combination of historical accident and embedded stakeholder interest groups. 

This choice set, combined with a long standing American mythos on individuality, the Jeffersonian desirability of independent yeoman, promoted a certain geography of settlement in the second half of the 20th century.  That choice set was dependent on cheap transportation which means the hard constraint is cheap gasoline.  And it is becoming less attractive as we squeeze against that binding constraint.

All choice sets have different hard and binding constraints.  A different choice set will become significantly more attractive. The medium to higher density choice set will have a different set of constraints and barriers to growth but it will continue to include a significant barrier of weak educational systems in the intermediate future. 

This conversion of choice sets will not be easy.  The built environment is a sticky environment.  Construction is not a just in time industry as even minimally maintained buildings can be very functional for significant life spans, and the financing of these buildings often entail most of an individual's working life and constitute a massive opportunity cost.  So when the trade-off unwinds, new options are not readily available for most people. 

Comments

[DragonScholar]

This is something I've been wondering about myself.

I lived in Ohio, lost my job, and decided that with the severance package it was time to look at other places to live. Ohio had some good things, but also a lot of disadvantages, so we began to look at other cities.

The tradeoff was really thought-provoking. I had to consider a number of personal, financial, and economic issues and do the calculations. My wife and I spent hours at a Starbucks going over relocation guides and discussing the future. Suddenly things we'd never thought of were prominent in our minds

What we learned in our research was just how insanely locations that seem similar vary in a variety of areas. We became painfully aware of history, geography, and economy around the country.

The economic shifts we're experiencing are now making what my wife and I chose to consider things people HAVE to consider - transport, location, commute, ideal living location, etc.