Wednesday, June 25, 2008

Life on the fringes of U.S. suburbia becomes untenable with rising gas costs

Life on the fringes of U.S. suburbia becomes untenable with rising gas costs

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Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the outer edges of metropolitan areas.

Just off Singing Hills Road, in one of hundreds of two-story homes dotting a former cattle ranch beyond the southern fringes of Denver, Phil Boyle and his family openly wonder if they will have to move close to town to get some relief.

They still revel in the space and quiet that has drawn a steady exodus from U.S. cities toward places like this for more than half a century. Their living room ceiling soars two stories high. A swing-set sways in the breeze in their backyard. Their wrap-around porch looks out over the flat scrub of the high plains to the snow-capped peaks of the Rocky Mountains.

But life on the distant fringes of suburbia is beginning to feel untenable. Boyle and his wife must drive nearly an hour to their jobs in the high-tech corridor of southern Denver. With gasoline at more than $4 a gallon, Boyle recently paid $121 to fill his pickup truck with diesel. The price of propane to heat their spacious house has more than doubled in recent years.

Though Boyle finds city life unappealing, it's now up for reconsideration.

"Living closer in, in a smaller space, where you don't have that commute," he said. "It's definitely something we talk about. Before it was, 'We spend too much time driving.' Now, it's, 'We spend too much time and money driving."'

As the realization takes hold that rising energy prices are less a momentary blip than a restructuring with lasting consequences, the high cost of fuel is threatening to slow the decades-old migration away from cities, while exacerbating the housing downturn by diminishing the appeal of larger homes set far from urban jobs.

In Atlanta, Philadelphia, San Francisco and Minneapolis, homes beyond the urban core have been falling in value faster than those within, according to analysis by Moody's Economy.com.

In Denver, housing prices in the urban core rose steadily from 2003 until late last year compared with previous years, before dipping nearly 5 percent in the past three months of last year, according to Economy.com. But house prices in the suburbs began falling earlier, in the middle of 2006, and then accelerated, dropping by 7 percent the past three months of the year.

Many factors have propelled the unraveling of U.S. real estate, from the mortgage crisis to a staggering excess of home construction, making it hard to pinpoint the impact of any single force. But economists and real estate agents are growing convinced that the rising cost of energy is a primary factor pushing home prices down in the suburbs - particularly in the outer rings.

More than three-fourths of prospective homebuyers are more inclined to live in an urban area because of fuel prices, according to a recent survey of 903 real estate agents with Coldwell Banker, a national brokerage.

Some proclaim the unfolding demise of suburbia.

"Many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and '70s - slums characterized by poverty, crime and decay," said Christopher Leinberger, an urban land use expert, in a recent essay in the Atlantic Monthly.

Most experts do not share such apocalyptic visions, seeing instead a gradual reordering.

"It's like an ebbing of this suburban tide," said Joe Cortright, an economist at the consulting group Impresa in Portland, Oregon. "There's going to be this kind of reversal of desirability. Typically, Americans have felt the periphery was most desirable, and now there's going to be a reversion to the center."

In a recent study, Cortright found that house prices in the urban centers of Chicago, Los Angeles, Pittsburgh, Portland and Tampa have fared significantly better than those in the suburbs. So-called exurbs - communities sprouting on the distant edges of metropolitan areas - have suffered worst of all, Cortright found.

Basic household arithmetic appears to be furthering the trend: In 2003, the average suburban household spent $1,422 a year on gasoline, according to the Bureau of Labor Statistics. By April of this year - when gas prices were about $3.60 a gallon - the same household was buying gas at a rate of $3,196 a year, more than doubling consumption in dollar terms in less than five years.

In March, Americans drove 11 billion fewer miles on public roads than in the same month the previous year, a 4.3 percent decrease. It was the sharpest one-month drop since the Federal Highway Administration began keeping records in 1942.

Long before the recent spike in the price of energy, environmentalists decried suburban sprawl as a waste of land, energy, and tax dollars: Governments from Virginia to California have in recent decades lavished resources on building roads and schools for new subdivisions in the outer rings of development while skimping on maintaining facilities closer in. Many governments now focus on reviving their downtowns.

In Denver - a classic American city with snarling freeway traffic across a vast acreage of strip malls, ranch houses and office parks - the city has seen an urban renaissance over the past decade.

A planned $6.1 billion commuter rail system has been going in over the past four years, drawing people downtown without cars, while crystallizing swift sales of densely clustered condos near stations.

Coors Field, the intimate, brick-fronted baseball stadium for the Colorado Rockies, has transformed the surrounding area from a desolate area into trendy Lower Downtown, a neighborhood of restaurants and microbreweries in restored warehouses. Along the Platte River, new condos set on a park strip offer an arresting tableau of glass, steel, and futuristic geometry, attracting throngs of buyers at rising prices.

"This is a city where it's fun to be in the center," said Tim Burleigh, 56, who sold his house in the suburbs and now walks to Rockies games from his downtown condo.

To Denver's Mayor John Hickenlooper, $4 gasoline offers a useful push forward on such plans.

"It can be an accelerator," he said during an interview inside the imposing, column-fronted City Hall. "It's not going to be the dagger in the heart of suburban sprawl, but there's a certain inclination, a certain momentum back toward downtown."

Elizabeth is the archetype of a once-rural community sucked into the orbit of the expanding metropolis, its ranchlands given over to porches, picket fences and two-car garages.

Megan Werner, 39, a mother of three, moved here five years ago from a suburb closer to Denver, where the houses were packed together. She and her husband bought a home set on a 1.5 acre, or 0.61 hectare, lot in the Deer Creek Farm subdivision. The space justified her husband's 40-minute commute.

"We wanted more than a postage stamp," she said, as her 5-year-old daughter walked barefoot across the driveway.

It used to cost her about $30 to fill her Honda minivan with gas. Now, it's more like $50, and she coordinates her trips - shopping in town, combined with dance lessons for her kids. But she has no thoughts of leaving.

"I can open up my door, and my kids can play," Werner said.

For others, though, new math is altering the choice of where to live. Houses are sitting on the market longer than years past. "The pool of buyers is diminishing," said Jace Glick, a realtor with Re/Max Alliance in Parker, next to Elizabeth.

Juanita Johnson and her husband, both retired Denver school teachers, moved here last August, after three decades in the city and a few years in the mountains. They bought a four-bedroom house for $415,000.

Last winter, they spent $3,000 just on propane to heat the place, she said. Suddenly, this seems like a place to flee.

"We'd sell if we could, but we'd lose our shirt," Johnson said. On a recent walk, she counted 15 "For Sale" signs. A similar home nearby is listed below $400,000.

"I was so glad to get out of the city, the pollution the traffic, the crime," she said. Now, the suburbs seem mean. "I wouldn't do this again."

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