Gas Prices and close-in neighborhoods

edited June 2008 in Seattle Real Estate
I read the article from the Olympian with interest but I couldn't help thinking about what my wife and I have observed about this. That is, the high gas prices may not help the neighborhoods all that much, but they may help "neighborhood businesses" somewhat. I must admit that I spend more time at my local Ace Hardware and less time at the Eagle Hardware down in the valley. It could also really boost those businesses to which people can walk.

My father made the argument the other day that gas is no more expensive than it was in 1952 - in 1952 dollars - so it should be no big deal. Thing is, it was considered EXPENSIVE back then. That is one reason the average car was considered high-mileage if it had over 30,000 miles on it. People walked or combined trips a lot more, partly because if you had a car you probably had ONE car.

We have built our culture around cheap gas. We will need to make (and are making) adjustments. For starters, whenever I buy something off craigslist, I have to factor in that it will cost me $6 to $25 in gas just to go examine the item. I didn't even consider that cost as little as six months ago.

We'll see more and more fine tuning of our new transportation paradigm as some businesses faulter and others flourish. It'll be interesting if nothing else.

Comments

  • Robroy wrote:
    For starters, whenever I buy something off craigslist, I have to factor in that it will cost me $6 to $25 in gas just to go examine the item. I didn't even consider that cost as little as six months ago.

    That's a good point. I have a friend that sells cheap furniture mostly using craigslist and business for him has been really slow this year compared to last. Maybe the cost of coming to inspect his wares (because people generally don't trust sellers on craigslist as much as actual retailers with a storefront) is hitting him more than the general economy (since you would think a shift to discounters would make up for the lack of buyers).
  • I'm also starting to wonder if one of the things that made the shopping mall so "doable" was the cheap gas. I am wondering if shopping malls may get hammered while online shopping explodes. I attribute this to the double whammy of high gas prices as well as the shrinking disposable income since the masses can no longer refinance themselves into shopping mall spending sprees. People will be counting the cost of EVERYTHING a lot more.

    And let's be frank, people buy a lot of stuff on credit that they would never buy if there was no such thing as credit and they had to pull the money out of savings. Credit is the foundation upon which our entire western civilization now sits. And that foundation has basically vanished.
  • Robroy wrote:
    Credit is the foundation upon which our entire western civilization now sits. And that foundation has basically vanished.
    I have a top-notch credit rating (800+ last time I checked, everything on time for 20+ years), yet got a letter from Comcast today telling me they need a $200 deposit for the cable I recently signed up for at my new place, since apparently my credit's not good enough. I even paid Comcast on time for 20 years! (I hate deposits, so it's good I had already decided to cancel & switch to DVDs only.)

    I think they're just trying to take advantage of the situation, but the tentacles of the credit "crisis" do seem to be far-reaching. I hope to take advantage of it myself eventually, via higher savings interest rates, & lower house prices of course.
  • Robroy wrote:
    We'll see more and more fine tuning of our new transportation paradigm as some businesses faulter and others flourish. It'll be interesting if nothing else.
    Yep. Assuming gas prices stay high, I'm expecting house prices in Bellevue to not fall too far; that is, I'd expect them to retain a good portion of their outsized gains since 2003, since close-in is now worth a premium. Plus close-in is a hedge against population growth. If your commute time increases by 20% but that's only 2 minutes, you don't care so much.
  • Looking at the Lake Hills neighborhood in Bellevue, asking prices have already fallen > 10% from last year's comps and they still aren't selling. And there are vasty more houses on the market in the streets around me that I've ever seen in my 5 years here.
  • Looking at the Lake Hills neighborhood in Bellevue, asking prices have already fallen > 10% from last year's comps and they still aren't selling. And there are vasty more houses on the market in the streets around me that I've ever seen in my 5 years here.
    I just noticed an oddity in Zillow. We were looking at my brother in laws house in Phoenix. Zillow has his house (built in 2001) valued at $403k, but shows his neighbor two doors down, in an effectively identical house, actually on the market with an asking price of $289k.

    ?
  • Zillow doesn't know that the houses are nearly identical, and even if a large percentage of the houses in the neighborhood sold for around $289K, it would probably be many months later before the zestimates of the remaining houses dropped to that level.
  • Markor wrote:
    Zillow doesn't know that the houses are nearly identical, and even if a large percentage of the houses in the neighborhood sold for around $289K, it would probably be many months later before the zestimates of the remaining houses dropped to that level.
    In a volitile market it does sort of make zestimates worse than useless though.
  • Looking at the Lake Hills neighborhood in Bellevue, asking prices have already fallen > 10% from last year's comps and they still aren't selling. And there are vasty more houses on the market in the streets around me that I've ever seen in my 5 years here.
    I saw a figure regarding real estate values in southern California and there was an interesting twist. They broke down the valuation change by general value group. The higher valued homes (over $1mm) had actually increased a little while some groups dropped by 65%.

    When pendulums swing, they tend to swing too far BOTH ways. I am wondering if this thing could hit more than a 50% general drop before the pendulum comes to where it should.
  • I think prices were around 30% over valued. I'm expecting to see them correct to 50% of their peak (adjusted for inflation). I seem to be closer to the extreme end of the price drop expectation (and I don't have a high confidence in my expectation). Eleua is at the extreme end and is expecting 80% price drop.
  • Alan wrote:
    I think prices were around 30% over valued. I'm expecting to see them correct to 50% of their peak (adjusted for inflation). I seem to be closer to the extreme end of the price drop expectation (and I don't have a high confidence in my expectation). Eleua is at the extreme end and is expecting 80% price drop.

    Careful with your numbers. A 25% drop wipes out 33% in gains, 33% drops erase 50% in gains, and 50% drops wipe out 100% in gains. So unless you believe prices will fall back to 2000 prices (remember, we've had a lot of inflation in the last 8 years), you don't actually believe in a 50% price drop.
  • I don't think it is unlikely that a house like in that location this might sell for $375k.

    http://www.redfin.com/WA/Bellevue/442-1 ... ome/510757
    442 109 Ave SE
    Bellevue, WA 98004
  • And there are vasty more houses on the market in the streets around me that I've ever seen in my 5 years here.
    Not enough though. When I'm interested in buying again, I hope I don't have to knock on doors and ask if they're interested in selling. It seems the % of inventory on the market here is a tiny fraction of what it is in other hard-hit places. Like I see few streets with more than 1 house for sale.
  • That's actually what caught my eye recently -- streets with multiple houses for sale. There's several like that in my neighborhood now.
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