In today's Wall Street Journal (www.wsj.com) there was an excellent article that highlighted the effect that the price of rising fuel may have on real estate demand in the city versus the suburbs.

The basic thesis of the argument was that since World War II suburban growth has been fueled in part by the cost of cheap fuel.  Let's face it, if we look at the commute times of some of today's workers you would have to agree that fuel has not been on the top of their list when determining where to live.   In my home town of Atlanta, I know there are plenty of families that have chosen to reside 30 to 50 miles away from downtown Atlanta.  Take today's $4 a gallon gas and a automobile that gets 20 miles to the gallon and you have a recipe for OUCH!!!, oh let me rephrase double OUCH, OUCH.

I have been explaining this to my wife ad nauseum for the last month so to get vindication through the "Journal" was excellent and also provided me with some additional data points regarding the dawning of what some have called the "New Urbanism" movement.

Either way you cut it, we all would have to agree that the current fuel debacle has been a resounding wake up call for us all.  It has shown what is possible and has also opened our eyes to the reality that we do have to consider many factors in a potential home purchase.... add to the list commute time and fuel efficiency.

I will update this further with some additional data that I have dug up which help to provide some further information on demand shift in the coming decades.  One data point is an excellent book written by a professor in MIT's real estate school that highlights the purported mathematical relationship between distance from city center (work) and home prices.

I for one think that we have to see a couple of key things occur in order for us to all continue enjoying what we consider ideallic suburban lifestyles.

1) Urban Planning and State Transportation Policy Makers have to figure out a way to successfully integrate high-speed rail & light rail access from city center to suburban center in a way that doesn't cause chaos and is supported by a majority of citizens.  (Example of how not to work is Atlanta.  We have an absolute debacle when it comes to rail transit to the outlying suburbs and our current governor believes that "ridership would not support a rail system". At $4 ... can we rethink that.)

2. Conservation.  Trips via our autos should include a spot-check on whether or not more tasks could be consolidated.  (i.e. if your making a trip to the mall - handle your grocery shopping on the way home as well).  Cheap fuel has made us lazy, myself included.  Its time to start thinking about optimizing our fuel investment.

3. Telecommuting  & Corporate Organizational Restructuring.   Corporations can also help out by envisioning new organizational structures that promote conservation, green ideals and also help their employees enjoy a better quality of life.  This may include moving from a centralized mammoth office tower into more regionalized centers or even suburban centers. 

In short, whether gas prices remain where they are at present or not, the situation has given us all pause to think about how our lives and our living choices will be effected both now and in the future.

Douglas Ingram

www.nesters.com