Could rising gas prices kill the suburbs?

Rising fuel costs are being blamed for everything from soaring utility costs to lower retail sales and higher airline tickets. And now, experts say high gas prices could reshape U.S. cities.

"Most analysts believe that crude oil prices in the $50s and $60s will be with us for some time," says Stuart Gabriel, director of the Lusk Center, a think tank at the University of Southern California devoted to studying real estate forces and trends. There's even talk of crude hitting $100 per barrel -- or 10 times what it sold for in the summer of 2005.

Once the realization soaks into the American consciousness that high-cost gas is here to stay, Gabriel predicts, those high commute prices will pull more homeowners -- even young families -- to live in central cities and create a push for more public transportation.

City of the future: here, soon
Gabriel already sees change in car-centric Los Angeles, where the commuter culture has for years pushed mile upon mile of city sprawl into neighboring towns and farmland. But now Gabriel says KB Home is leading the way to a new type of neighborhood.

Once thought of as a first-home builder, KB in June launched KB Urban to develop high-density, mixed-use projects. The first such project will be a 2-million-square-foot complex of luxury hotels and private residences built in partnership with hotelier Marriott International and sports-and-entertainment company AEG, owner of L.A.'s Staples Center. This kind of development, Gabriel believes, will help make L.A. a denser, European-type central city. It is celebrated in a 2004 film called "The End of Suburbia."

"If you or I come back to Los Angeles 15 years from now, we are not going to see (the current) persistent pattern of building single-family detached homes farther and farther into the desert," Gabriel says. Instead, he says, expect "a denser center city, denser inner-ring suburbs … a city that is more vertical."

High gas prices added incentive to in-fill
In truth, the trend toward city living began before the oil-price run up, Gabriel says. But high gas prices are reinforcing the changes already begun by homebuyers reacting to congested freeways, long commute hours and the desire for a different kind of life.

In San Jose, Calif., builders have clustered attractive condominium developments at and around light-rail stations as the system was built and expanded. An example of transit-oriented development, planners have expected for some time that high commute costs would create a market for such homes.

Walter Molony, spokesman for the National Association of Realtors, says that the gas-price spike is still too new to have generated much in the way of hard data. But if one informal Web survey is correct, commuter wariness looks like it could soon shape home-sales trends. At HomePages.com, 45% of 2,000 readers polled during one week in May agreed that gas prices were "very important" to them in choosing a home. Among the most-important factors in a home location, a short commute was second only to a safe neighborhood.