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HERE IN CHICAGO - WILL THE ECONOMY, HIGH GAS PRICES Halt Suburban Expansion?

FAR-FLUNG SUBURBS BECOME LESS DESIRABLE AS GAS PRICES RISE, CLOSER-IN NEIGHBORHOODS BECOME MORE AFFORDABLE!

During the peak of the Housing Boom here in Chicago a couple of years ago, many families began fleeing the city and closer-in suburbs.  They wanted the wide-open spaces, and the larger homes for the money, that distant suburbs offered.

Many moved to Lake County, North of Chicago, where Downtown Chicago workers braved a  1 1/2 hour commute to get to work each day.  Others fled far west - making distant Kendall County, West of Chicago, one of the fastest-growing counties for a while.

Those who moved way out in the country - far from shopping and distant from METRA Commuter Train Lines to Downtown Chicago and The Loop - had little problem with the commute, and the long rides for shopping trips.  Gas was then cheap, many rationalized. 

Closer-in communities were too expensive, for postage-sized houses and lots.  And land was plentiful, houses were roomier, and prices were lower, the further out you traveled.

Today, many ex-urbanites have cause to rethink their move.  Gas is over $4.00 for a gallon of regular most everywhere around Chicago, and shows no sign of dropping dramatically any time soon.  Easy, high-leverage financing is harder, if not impossible, to come by.

Further, houses in those closer-in suburbs are becoming more affordable, as many of these anxious owners have been dropping their prices aggressively in order to sell their homes.  Today, for well-qualified buyers, there is no longer any need to move far out to get the roomy house you want!

In 2004, Jodi Caldwell moved from Southwest Suburban Bollingbrook to the Far Western Chicago Suburb of Yorkville, in distant Kendall County.  She couldn't resist how much house and land she could buy there, for less money, she recalled.

Today, however, Ms. Caldwell and her family budgets over $1,000 each month for gasoline.  She drives miles to go shopping, and the closest METRA Commuter Train Stop, with service to Downtown Chicago, is in Suburban Aurora - 12 miles from her home.

According to the Center for Neighborhood Technology, families in far-away Kendall County earning the median income now spend as much as 26% of what they earn on transportation.  Those living in closer-in communities, with closer mass transit options, spend as little as 14% of their household income on transportation, the agency found.

"Transportation costs are now overtaking housing costs for families," said Mike McLaughlin, Transportation Director for the Metropolitan Planning Council. "The days of 'I want my 2 acres and to live in the middle of nowhere' may be declining."

While home prices in many parts of the Chicago Metropolitan Area have fallen over the last few years, prices are falling much faster in distant communities where long commutes are required, and public transit options don't exist, says Economist Joe Cortright.

"It's the places where you have to drive everywhere that will have the biggest challenge," said Cortright, whose study, "Driven to the Brink," was funded by CEOs for Cities, a pro-urban group based in Chicago.

Today, Caldwell believes the high cost of gas, and few commuting options, are actually scaring away families looking for their new home in distant communities and subdivisions.  A real estate professional herself, she often finds clients asking her how close shopping and transportation are to specific homes, and then balking if they feel the homes are located too far out.

Other sub-divisions, in suburbs ranging from Crystal Lake, far northwest of Chicago, to Manhattan, 50 miles south, tout close proximity to new shopping strips, and newer METRA Stations.  This puts more distant communities, as far as distant DeKalb County, at a serious competitive disadvantage.

How the level of interest in places further away will play out long-term is unknown.  However, the shifting housing market has had one important side benefit - communities closer in are seeing a certain resurgence.

See Gerry Smith's story in last Sunday's Chicago Tribune for more info.

DEAN MOSS & DEAN'S TEAM CHICAGO

Posted: Friday, September 26, 2008 2:49 PM by Dean's Team

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