Fate Of The Suburbs Part II

Posted at 10:07 AM, Jul. 25, 2008

It is true that suburbanites do much more driving than downtown dwellers. But it is also true that the Peak Oil crew has presented a "worst case scenario" that is usually not applicable.

First and foremost, not all suburban workers commute to "downtown." Several major employers, like Intel in Chandler, and Boeing in northeast Mesa, are conveniently located way out in the burbs.Soon, the Williams Gateway airport, in southeast Mesa will grow into a very  large employment hub. The more affordable cost of large chunks of land in the outer regions of metro areas mean that this trend is almost certain to continue.

Telecommuting is the second reason that $5.00 or even $8.00 per gallon gas will not completely destroy suburbia. A significant number of white collar workers soon will do their jobs completely out of a home office. An even greater number will do this at least three days, and limit physical trips to the office to  twice a week. At the college level, similar benefits will be achieved via online education.

Third, a switch to far more fuel efficient vehicles is already under way. This probably will result in almost doubling the average miles per gallon of the typical commuter craft in less than a decade. Further, if both employers and government implement strong incentives to reward car pooling, the fuel used per  commuter will be greatly reduced once again.

So the increased cost of driving does not seem likely to destroy the suburbs any time soon. But future suburban desirability will be affected  for better and worse by the TWO factors that determine real estate value: location and timing.

First, lets look at the early suburbs, constructed at the edge of any city that is just beginning its growth into a metropolis. All too soon, those areas will become engulfed by the city itself, which is a mixed blessing. Certain parts of Tempe make great examples. The best thing is that these single family homes will always retain their private yards, and a priceless increment of isolation from their neighbors. On the other hand, traffic congestion and crime increase, and public schools begin to suffer the same problems as downtown. Pretty soon, middle class homeowners decide there must be "a better place to raise my family," and they move farther out. A few of these in close suburbs become upper class enclaves, with much better schools and other amenities for executives who really do work downtown.. The more "affordable" subdivisions however go into a decline which will continue until some uncertain time in the future when they will become hip as "historic districts" worthy of restoration.

The other extreme is found in the newest, remote developments, built with an assumption that urban expansion and real estate booms would continue unabated forever. Queen Creek is the perfect example. During the 2004-2006 boom, prices rose so fast that first time buyers felt compelled to "keep driving (ever farther out) till they qualified" to purchase a home. Two years later, these buyers find that their fuel expenses have tripled. Road improvements lag far behind population growth in those areas, so their commuting time and misery factor are almost intolerable. Prices have declined for closer in housing, so those poor folks cannot afford to sell their homes, and too often can no longer afford the commute. As I mentioned in Part I, some streets in Queen Creek have more houses vacant than occupied, and a very desolate ambiance. For remote suburbs like this, the peak oil worst case scenario seems accurate. With time, Queen Creek's prospects may improve. But we are talking about a long time.

That brings us to that final category of "just right," suburbs that at present, are neither too new or old.... nor too close in or far out. They will be subject of Part III.