Could Fewer Cars Mean Higher Home Values?

Here's a thought experiment: picture your nearest subdivision with for-sale signs dotting the yards. Now picture a high-rise downtown with easy access to theaters and restaurants, maybe a valet, and a transit stop a couple of blocks away.

If you give up your car, can you afford the high-rise? And will you miss your car?

Shakes things up, doesn't it? With news that the total number of American cars on the road shrank last year, a leading (albeit crunchy) think tank believes that Americans have lost their knee-jerk attachment to new cars. The Earth Policy Institute parsed federal data and concluded that the total stock of American cars dropped by two percent last year, from 250 million to 246 million. We can't declare whether this represents a long-term shift or a just a symptom of the recession, but let's consider for a moment about what it suggests about strength in housing markets.

The Institute's director, Lester Brown, argued that young people, who are more likely to live in cities with decent public transport, care less about cars than people in their 40s and 50s did when they were teenagers. That makes sense, since first-time home buyers generally avoided cities a generation ago.