Sub-Prime Crisis + Expensive Gas = End Of Sprawl?

This op-ed by Eduardo Peñalver, a Cornell professor of property and land-use law, suggests that escalating gas prices and declining home prices may drive development inward, presenting a great opportunity to end sprawl using regional planning.

"American sprawl was built on the twin pillars of low gas prices and a relentless demand for housing that, combined with the effects of restrictive zoning in existing suburbs, pushed new development outward toward cheap rural land. With credit tight and the demand for housing drying up (sales of new homes fell last month to the lowest level in 12 years) new construction in the exurbs is grinding to a halt."

At the same time, "persistently high gas prices may mean that the next building boom will take place not at the edges of metropolitan areas but far closer to their cores. The result is a decline in the building industry's appetite for rural land on the urban edge."

"The question now is whether that decline will last..."

"As the New Urbanist News reported this fall, during the present (housing) downturn, accompanied as it has been by high gas prices, homes close to urban centers or that have convenient access to transit seem to be holding their value better than houses in car-dependent communities at the urban edge. A recent story in the Minneapolis Star Tribune blamed flagging growth in the Twin Cities' outer suburbs on rising gas prices. If prices at the pump continue to increase, as many analysts expect, the eventual recovery of demand for new housing may not be accompanied by a resumption of America's relentless march into the cornfields."

"Accommodating a growing population in the era of high gas prices will mean increasing density and mixing land uses to enhance walkability and public transit. And this must happen not just in urban centers but in existing suburbs, where growth is stymied by parochial and exclusionary zoning laws."

"Overcoming low-density, single-use zoning mandates so as to fairly allocate the costs of increased density will require coordination at regional levels. This shift toward a more regional outlook will force broad rethinking of how we fund and deliver services provided by local governments, most obviously (and explosively) public education, and will also provide a badly needed opportunity to take stock of the car-dependent society and to begin imagining different ways of living and governing."

Thanks to Eric Bruun

Full Story: The End of Sprawl?

Comments

Comments

Just as Possible:

Declining housing costs at the urban fringe more than offset increased commute times and expenses. Lower construction costs and lower densities and more flexible zoning makes fringe housing more energy efficient with the introduction of technology such as heat pumps, solar arrays and passive techniques like landscaping. thermal massing and siting orientation. Communications improvements make fringe housing early adopters of greater telecommuting.

The fact of expensive gas doesn't justify the speculative conclusion of less sprawl. It doesn't justify my speculations either but any honest objections to my methodology would be hard pressed to ignore the failings of the opposite assertions though undoubtably some imagine themselves both up to that task and unable to stay silent.

End of sprawl = end of 'drive til you qualify'

Surprisingly, I agree with Robt for once.

Until folks can no longer drive 'til they qualify' sprawl won't end.

This means that sprawl will slow as housing costs at the fringe rise with gas prices, as construction labor will no longer be cheap (as they typically drive all over the place to go to work). I agree that efficiency gains in construction trades/code will mean heating/cooling costs should fall or maintain.

We should calculate how $125-150/bbl prices will impact the food and fiber sectors too and whether that drives up household budget numbers, making living proximate to services may be more efficient for households as they seek to reduce costs.

Also, living proximate to services means better environmental health outcomes; if we don't fix our health care system to be more affordable and more of a preventative care system, households may decide to sort to more walkable neighborhoods to lower costs by having positive health outcomes by getting out of their car.

Lots of complexity in there that planning for simple solutions should be wary of...

Best,

D

as expected

• Surprisingly, I agree with Robt for once.

Not surprising at all. You are older and more circumspect as you learn more.

• Until folks can no longer drive 'til they qualify' sprawl won't end.

By the same measure; until cenurbans cannot depend upon transit subsidies...

• This means that sprawl will slow as housing costs at the fringe rise with gas prices,

You mean, of course, marginal costs and then mostly for existing residents. There is no indication that total costs rise with rising gas prices.

• as construction labor will no longer be cheap (as they typically drive all over the place to go to work).

Construction costs plummet in recessions or even slowdowns as are usually associated with rising energy prices.

• I agree that efficiency gains in construction trades/code will mean heating/cooling costs should fall or maintain.

More important, these dynamics will fall disproportionately upon the exurbs. Care to permit and build an urban core Hydrogen filling station?
moreover, solar demands lower density to be practical. apartment buildings in the shadow of office buildings are not going to be leaders in distributed energy.

• We should calculate how $125-150/bbl prices will impact the food and fiber sectors too and whether that drives up household budget numbers, making living proximate to services may be more efficient for households as they seek to reduce costs.

• ...
Lots of complexity in there that planning for simple solutions should be wary of...

Yep. That's why the Kunstler idea of the end of cheap energy equals the end of suburbia is so wrong.

Expected?

.

hydrogen filling stations?

where?

I didn't know there were people out there who still thought this was a viable technology.

In this region we have two nuclear plants, one on the exurban fringe (an area that was rural when the plant
was built) and one in a rural area. We have coal plants on the far edges of the region. Our wind farms are in the hills 100 miles north or along the ocean 60 miles to the southeast. Our larger PV arrays are on the rooftops of big-box stores and warehouses. In fact, the only energy production that takes place anywhere near the urban core is one incinerator and two gas turbines - all 5 to 7 miles from the core. I'm not sure why one would assume that a.) the old plants are going to go away any time soon and b.)new capacity, renewable or otherwise, would be added in a geographical location that's drastically different than where it's always been added.

Solar arrays in the 'burbs? Maybe on $500k+ houses but not for housing for the $350k and below units
which, in this region, makes up 80% of the market. I've seen far more PV and green roofing on new consruction
in the city than i have in all of the suburban counties combined.

With the exception of perhaps NYC how many north american cities have any significant percentage of their
residential population living in the shadow of skyscrapers? Or living in the shadow of anything save trees?
I'm going to go with less than 1%. That's to say nothing of the fact that, where most of the population in the country lives PV arrays are far less cost effective than wind - and if you're going to get into residential components, from my own experience, microwind is a lot more promising.

It's about the cost of energy. Living a suburban lifestyle in the exurbs is more energy intensive than living anywhere else in the region and it's always going to be regardless of what source the energy is coming from. It's also about the lag time. We can talk all we want about these alternatives but they still cost more than the conventional sources. All we have to look forward to is the prices equaling out some day. Not because the alternatives fall in price but because the conventional sources continue to rise in price.

That said, in the Philadelphia region i think most of our suburbs will weather any future storm without too much trouble. People will need to make some gradual lifestyle and zoning adjustments and perhaps give up some road space and grant easements to pedestrians and cyclists but it'll be fine in the end. Where it won't be fine is with most of the subdivisions that went up in the last 10 years.

Subprime Crisis

Good comments so far - pretty much agree. There was a long debate about this op-ed on the urban policy listserv that basically regressed into not much worthwhile.

One thing that annoys me about authors equating subprime mortgages and exurban growth/sprawl is that it assumes a spatial pattern among subprime mortgages. I understand a lot of them were originated on suburban/exurban homes, but one is just as likely to default on a mortgage in a central city victorian, a innner ring bungalow, or a suburban Mcmansion. It has everything to do with the borrower's financial condition and judgement and little to do with the spatial component of the asset. The housing slowdown might curb sprawl for a while since most production builders build "sprawl" subdivisions, but that is temporary (2-5 years).

As for the price of gasoline, I would argue that it is not that expensive historically. The drive till you qualify and resulting residential density could change if gas prices were high enough, but I don't think we are there yet.

Gas Prices

"As for the price of gasoline, I would argue that it is not that expensive historically."

From what I hear, prices have just reached their historic 1980 peak. Depending on how you adjust from inflation, they are just above or just below 1980 levels.

Yes, they would have to get significantly higher before they affected "drive till you qualify" - or we would need other anti-sprawl policies in addition to gas prices.

Charles Siegel

Subprime foreclosures.

It has everything to do with the borrower's financial condition and judgement and little to do with the spatial component of the asset.

Hmmm. I doubt anyone's done an analysis yet, but I wonder what %age of the foreclosures were in the McSuburbs, as these are relatively less expensive & attracted the speculators. I'd say fewer than inner rings if you factor out the speculators. Just a guess.

Best,

D

Housing crisis = the end of infill development

In my observations in a low-density region with very few urban neighborhoods to speak of (Sacramento), the housing slowdown is having the strongest effect on new infill development. These new units are having a hard time selling and many developers are slashing prices or even giving up on selling and switching them to rentals for the time being. Therefore I would argue that in these regions the housing crisis may have the opposite effect than predicted in the article. Developers will back off from infill, an “experimental” housing type (in this area) that involves complicated land assembly, infrastructure improvement, and NIMBY-ism. Instead, they will stick to the easiest and most predictable product types (sprawl) to remain afloat through the crisis.

On the other hand, gas prices will have to double or more from current rates before they start to have any noticeable effect on settlement patterns.

Housing Crisis and Infill Development

In the Bay Area, prices are holding up best for infill development (eg, in SF and downtown Oakland). There are the most foreclosures and the most rapidly declining prices on the fringes (eg, in Stockton or and Tracy).

Sales are very slow everywhere. It seems that virtually nothing is selling around Berkeley, but prices are not in freefall here.

Charles Siegel

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