Urban Real Estate Gets a Boost Over 'Burbs With New Obama Program
It's called the Partnership for Sustainable Communities, and the idea behind it is to encourage real estate investment near mass transit. The U.S. Department of Housing and Urban Development and Department of Transportation are teaming up for the first time to make it happen. Altogether, they'll be giving local governments around the country $175 million this year to make the necessary preparations.
That's not a lot of money, but it could be the beginning of a sea change in how the government influences the real estate market.
Since as far back as the 1930s, trillions in federal investment created the nation's suburbs, by building interstate highways and financing mortgages for homes in new subdivisions outside cities. It was all part of a deliberate plan.
Now, Washington is looking to throw that process into reverse, in order to stop suburban sprawl and the oil dependency, greenhouse gas emissions, obesity and other ills that have resulted from a total dependence on cars in much of the nation. Of course, officials are being careful about how they say that. Americans love their cars and the easy lifestyle they make possible, at least when the traffic isn't unbearable. The idea here is to give people more options outside of driving, and especially to create more housing in places where it's possible to walk or take a light rail train, too. (If you want all the wonky details, they're here in an article I wrote for The American Prospect magazine.)
As anyone who's looked for real estate in New York or San Francisco knows, finding an affordable and comfortable place to live in a place like that doesn't come cheap. But the hope here is that by increasing supply of real estate within walking distance of transit, shopping, schools and so on, an urban lifestyle won't be for just the very rich or very poor.
It will take years to see results from the new sprawl-busting program. But in a sense, the government is just going where the market is already moving. Let's start with foreclosure trends: As HousingWatch has reported, homeowners who have access to public transportation are much less likely to go into default on their mortgages than those whose only choice is to get in the car. Not only are their property values less likely to have plummeted, but they don't have the financial burden of keeping multiple vehicles insured, financed and full of gas. Another study found that property values in areas with high rankings on walkscore.com, which rates how easy it is to get to shopping and other services on foot, have declined much less than those in areas with low walk scores.
Choose the home of your dreams. But if it's in a new subdivision far from transit, do it for love. As a financial decision, it's going to be a gamble.
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