For those still skeptical of the tie in between higher oil prices and housing, I recommend a reading of Driven to the Brink. How the Gas Price Spike Popped the. Housing Bubble and Devalued the Suburbs (PDF).

The collapse of America’s housing bubble—and its reverberations in financial markets—has obscured a tectonic shift in housing demand. Although housing prices are in decline almost everywhere, price declines are generally far more severe in far-flung suburbs and in metropolitan areas with weak close-in neighborhoods. The reason for this shift is rooted in the dramatic increase in gas prices over the past five years. Housing in cities and neighborhoods that require lengthy commutes and provide few transportation alternatives to the private vehicle are falling in value more precipitously than in more central, compact and accessible places.

The (permanent) loss in value for decentralized housing locales could be estimated by calculating NPV of annual payment streams for extra commuting costs. It was estimated in Wisconsin alone 50 cents of higher gas prices resulted in $300 million in annual gas spending; that spending comes out of home site prices (land values). A two-dollar price increase, $1.2 billion annually, NPV for a twenty-year time frame: ? Factored up for a national loss estimate= ?

I suspect easily $1 trillion in real estate value vaporized due to increased commuting costs. That would represent a roughly $10,000 discount on the site value (land alone) for about 100 million homesites nationwide. This value only returns if long-run commuting costs return to late 1990's/early 2000 values. Likely? Not. So, how to value all the loans associated with that land? Add on top of that destroyed structural value (pipes stolen, etc.) and add on that the declining employment and wages (net demand for housing). We are paying/have paid a hefty price for not planning for peak oil. Whoops.