Rising Gas Prices Crushing Housing Recovery in Inland Empire

Even though falling prices in California’s Inland Empire are making homes more affordable, rising gasoline prices are crushing hopes of a housing recovery in this area, east of Los Angeles.

Deutsche Bank analyst Nishu Sood estimates that gas expenditures in the Inland Empire have increased to $1,322 a month from $534 a month in 2003 among local residents who commute about 120 miles a day, round trip.

Mr. Sood says soaring gas prices are hurting home builders that generated much of their profits during the housing boom by building in the far-flung suburbs of California. But it’s also hurting builders in non-bubble markets in Texas and Atlanta with long commutes.

Overall, a person living in a recently built suburban subdivision travels 14,883 miles a year compared to an average of 12,197 miles, Mr. Sood estimates. “Land that was purchased with expanding metro areas in mind has already been hard hit in value,” says Mr. Sood. ”Sustained higher gas prices could render it effectively worthless.”