HOUSTON — Gasoline prices likely have an impact on residential property values, depending largely on a home’s proximity to the city center, according to a new study by the Brookings Institution, a Washington, D.C.-based think tank.
The effect is likely due to consumers who become more wary of long commutes when gasoline is pricier.
In their study, Brookings researchers found that a 10 percent increase in gasoline prices tends to increase the value of some properties close to the city center by as much as $5,590.
At the same time, they reduced the value of some homes in the outskirts by up to $7,850.
Researchers based their findings on data gleaned from 35 years of home sales in Clark County, Nevada. They say their study, based on the sales more than 900,000 homes, is the first to examine the direct impact of gasoline prices on home values using data for specific properties.
The researchers say while several studies have examined the effect of home heating oil prices and energy efficiency investments on home values, there’s been little researcher on gasoline prices and how they affect someone’s willingness to buy a home. The authors conclude:
These results suggest gasoline prices may be affecting credit risks, property markets, and household wealth in ways the economic literature has so far not fully recognized.
While some studies have found that in general gasoline prices are not significant determinants of home values and foreclosure, our results suggest that there may be significant location-specific risks within metropolitan areas.
The authors say the study has serious implications for communities since it shows how energy policies could impact everything from city planning to household wealth.
The authors’ study was conducted, in part, to see how carbon taxes or other efforts to put a price on greenhouse gas emissions could affect individual households.