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Buyers get it: longer commute = smaller house
Scott Rogers writes:
Over the past two weeks, I have had three separate buyer clients who have decided not to pursue a home (or homes) in a particular neighborhood or town because of the distance it would put them from their place of employment. All three work in Harrisonburg, and have decided to primarily look at properties located in the City.
These buyer were considering homes in towns roughly 20 miles away, which (if we only examine gas costs, and their work commute to Harrisonburg) would equate to roughly $2,000 of extra fuel costs per year. (20 miles, 20 mpg, 2 trips/day, 5 days/week, 50 weeks/year, $4/gallon)
This wouldn’t include other increased costs such as:
- fuel costs for other trips (entertainment, recreation, church, etc)
- increased auto maintenance costs
- changes in quality of life based on a longer commute
To put $2k/year in perspective — if these fuel savings were instead used to allow the buyers to afford a larger home, they could increase their loan amount by $26,000! (30 year fixed, 6.5%).
Are others seeing these same sort of fuel-based buying decisions in your parts of the Commonwealth?
Maybe, but you also get more house for your money the farther away you drive from the core of the market. Buyers who make a decision based on gas prices are just reacting to the current situation and not thinking. Choose a lifestyle and adjust your habits to make it work.
Dave — thanks for your comment. A few thoughts…
>> Maybe, but you also get more house for your money the farther away you drive from the core of the market.
This is certainly true. However, it doesn’t necessarily change the effect of high fuel costs. Twenty minutes out from Charlottesville likely offers a different proportional “discount” than twenty minutes out from Harrisonburg. In Harrisonburg and Rockingham County, many buyers are finding that the increased fuel costs outweigh the “more house for your money” factor.
>> Buyers who make a decision based on gas prices are just reacting to the current situation and not thinking.
This will be an interesting comment to reflect back on a year from now. =) For it to be true, we would have to see at least somewhat lower fuel costs a year from now. Are you thinking we’ll be back down to $3.50/g? Or maybe $3.00/g?
Scott,
The gas bubble is already bursting and prices are dropping. We will be down to $3.50 by the end of the year. Just wait to see what happens after the election. The run up in gas is not unlike the run up in housing. Too quick. I think it will come back down.
Yes, each area is different, so applying my reality in Cville to yours is probably not wise.
Consumers are making the same decisions here in the Greater Piedmont area. Half my current seller clients are moving closer into DC and their jobs. I believe this is a long term trend that will continue. Gas prices may be down a little now, but there’s no way they stay there.
Our current lifestyles are unsustainable on just about every level. Suburbia doesn’t work and exurbia is really dead! These small, outlying bedroom communities will need to become their own center of gravity. There will have to be a new compelling value proposition for places like Culpeper.
I’ve run into this quite a bit this year. We used to say, “You get more house for the money the further you are willing to drive”; but really, what is the definition of “more house”?????
Tina in Virginia
Another variable that should be taken into account is time. Time is money afterall. 20 mins is not a long commute but for example 30mins is 1 hr. there and back which you could be doing something else. I would use that time to put in more work time. Then take into account your 1hr. on gas a day expense and your opportunity costs make buying in the city look a lot better.
I am lucky to be in a market area that is just far enough from the city to be relatively affordable but still close enough to be a manageable commuter. However, I still see clients lured to the outer burbs but mainly for the land and privacy some of the more semi-rural/rural areas offer.