“Over the next four years, we are likely to witness the greatest mass
exodus of vehicles off America’s highways in history.”
Jeffrey Rubin, CIBC Markets, June 2008
The Denver Post ran an article this morning about the impact of $4/gallon gas on SUV sales. The article confirmed that not only where new SUV sales being decimated but that people were selling or trading in their SUV’s at a deep discount to blue book in order to escape $100 per week fuel costs.
However, peak oil and the resulting run away gas prices will soon effect more than the sales of inefficient SUV’s and trucks. A recent Canadian Imperial Bank of Commerce [CIBC] study predicts that 10 million cars will disappear from America’s highways as people with incomes of less than $25,000 are priced out of the car driving public and that U.S. automobile sales will decline from 17 million to 11 million by the year 2012.
It’s not surprising that the initial impact of Peak Oil would be to reshape the American automotive landscape, but what about the automobile’s twin sister, suburbia? What was probably more interesting about the Denver Post article was the subtle connection between gasoline costs, foreclosures, and housing. The article points out that in Temecula, a suburb at the outer reaches of a reasonable commute to San Diego and Orange County, has a staggering 15% of its 25,000 homes in foreclosure indicating that many of the commuting suburbanites of Temecula may have been pushed over the edge of solvency by the cost of gasoline to get them to work and back homes they can no longer afford.
This may be just the beginning of a massive shift in the real estate axiom of “location, location, location” as housing prices hold near job centers but continue to decline rapidly in the outer reaches of suburbia.