Rising gas prices may be the latest ailment afflicting the housing market, as figures released Monday showed Southern California home prices plunging 27% in May from a year ago and falling even more precipitously in distant suburbs.
Outlying areas like the Antelope Valley and the Inland Empire have long appealed to people who were willing to accept a burdensome commute for the chance to own a better house. But buyers are increasingly factoring gasoline costs into their purchase decisions, said Dan Griffith, a Rancho Cucamonga-based real estate agent.
"It seems like the money they can save in housing is being absorbed by higher gas costs, so they are a little reticent to commit," Griffith said. "Gas is definitely beginning to be a concern."
The median home sale price in six Southern California counties sank to $370,000 in May, down from $505,000 a year earlier, according to DataQuick Information Systems.
DataQuick said that was the biggest annual decline it has recorded since it began tracking prices in 1988. The last time the median was lower was in March 2004, when it was $364,000.
Price drops were especially steep in far-flung suburbs. The median price fell 38% in Lancaster and 42% in Palmdale, compared with 23% in Los Angeles County overall.
San Bernardino County saw prices drop by 31%, but it was worse in the remote town of Victorville, where values declined 43%.
Christopher Leinberger of the Brookings Institution, a Washington think tank, says home values in these so-called exurbs may continue to languish long after urban markets begin to recover, thanks to higher gas costs.
"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 said. "Now as energy prices go up, the housing prices out there on the fringe take a major hit."
Lynette Williams, a real estate agent in Pasadena, said the clients she sees these days are more willing than in the past to accept modest homes if they are close to work.
"They're downsizing what they think their ideal house would be," Williams said. "Compared to two years ago, they are staying in closer proximity to their jobs. They're more focused on the neighborhood they want."
Foreclosures also continue to play a role in falling home values, as buyers default on loans and lenders unload properties at a discount.
