The Big Picture

The value of real estate is highly influenced by factors that are foreseeable. I often think about the investors who chose to build commercial buildings in downtown Durham, North Carolina, for example. A lot of those buildings were built in the 1920's.

At that time, Durham was a burgeoning commercial center. Building a new commercial building downtown must have seemed like a good idea. But in reality, urban problems worsened while cars allowed wealthier people to move to the suburbs and do their shopping there. Result: Lots of empty buildings in downtown Durham.

So what's that got to do with me? Well, the changes that automobiles caused in land-use patterns were eminently foreseeable. While many people didn't foresee the impact of the car on suburbanization, others did. Those that didn't foresee these changes built in areas that declined in relative value.

The declining supply of gasoline in the world is an obvious reality that will change land-use patterns in the United States again. Pedestrian and transit unfriendly locations are going to become less desirable as gasoline costs rise.

This is a reality that is foreseeable. Yet for some people it remains totally unforeseen. My conclusion: Invest in the more pedestrian and transit friendly future. That doesn't mean you have to live in Southern Village. But it does make Southern Village one of a couple of smart moves you can make in Chapel Hill.

Oh and one more thing: Downtown Durham is making a comeback partly for this same reason.