Tuesday, August 22, 2006

Could Rising Gas Prices Kill the Suburbs?

Could Rising Gas Prices Kill the Suburbs?
Once Americans start to realize that high-cost gas is here to stay, more home owners, including young families, will want to live in central cities and there will be a push for more public transportation, predicts Stuart Gabriel, director of the Lusk Center, a real estate think tank at the University of Southern California. In the Los Angeles area, Gabriel says that KB is leading the way to a new type of neighborhood that will give the city European-type higher density. The first of KB Urban’s high-density, mixed-use projects will be a 2-million-square-foot complex of luxury hotels and private residences built in partnership with hotelier Marriott International and AEG, a sports-and-entertainment company that owns L.A.’s Staples Center. “If you and I come back to Los Angeles 15 years from now, we are not going to see (the current) persistent pattern of building single-family detached homes farther and farther into the desert,” Gabriel says. Instead, he expects “a denser city center, denser inner-ring suburbs…a city that is more vertical.” Assuming a full-time job, $3 gas, 26 miles per gallon and 50 cents a mile for maintenance and no parking fees, a 50-mile roundtrip commute costs more than $646 a month, or more than $7,750 annually, according to the City of Bellevue, Wash.’s Commute Cost Calculator. A 10-mile roundtrip commute reduces that to about $1,550 annually, or by $517 monthly. That savings can pay for an additional $80,000 on a mortgage loan, according to David Kasprisin, district sales manager for National City Mortgage Co. in Chicago, whose rule of thumb is that each $250 you can free up equals roughly $40,000 more you can borrow at the current 6.5%. (http://www.realestate.msn.com/) MSN Real Estate (8/18/06); Marilyn Lewis


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