Gas prices hurt housing sales; sprawling suburbs may not make comeback

Rising gas prices may be the latest ailment afflicting the housing market, reports today's Los Angeles Times.

Southern California home prices plunged 27% in May from a year ago, but fell "even more precipitously in distant suburbs," the paper reported. And thanks to higher gas prices, those sprawled-out 'burbs may not ever climb back, according to Christopher Leinberger of the Brookings Institution, a Washington think tank.

"Under the old model we have lived with for the past 50 years, you could drive away from major employment concentrations until you could qualify for a house because cheap energy costs made it possible," Leinberger told the paper. "Now as energy prices go up, the housing prices out there on the fringe take a major hit."

One real estate agent told the paper that most people were better off buying a home within an easy commute of work anyway because gas is not tax-deductible, but mortgage interest is.

Of course, as our keen-eyed real estate reporter Jim Thorner pointed out last month, "In the Tampa area, suburban home prices stink because that's where every speculator and his cousin were playing real estate tycoon."

[Photo: Getty Images]

--Craig Pittman