There’s more at stake than a couple of lattes a week. If you don’t care about the environmental damage caused by our car-dependent culture, you should at least care that gasoline is a limited resource. As oil becomes scarcer and harder to extract, gas prices will rise to levels that make you nostalgic for the days of $4/gallon.

My husband and I, we’re looking for a house and one of the factors we consider is the distance of travel from home to work. $10 a week is nothing…for now. But add it up to a year’s worth multiply it by 2 since there’s 2 cars and you add those little extra time we fill up because we go places and on-calls and consider that the price MIGHT still go up higher than $4.00…so it’ll take its toll.

Qality of life is important. Choose where you want to live, and don’t worry about the cost of gas. Support research for new fuel alternatives. Ride the bus, or rail when you can. But for Pete’s sake, don’t live in a home you hate just to save $10 or even $20 a week on gas.

The more the cost of gas rises, the more we move towards a real solution to fix the issues of burning fossil fuels. If oil stays cheap - that will never happen.

Commute time is always a factor in choosing where you live, but I think this is a different factor altogether than cost of gas. At least to me, lost time commuting is a higher price to pay than even the gas.

I think it’s a balance about what’s important to you (which differs for each and every one of us), and what’s far away for one person may not be far a way for the other. Just to say that the cost of gas may not be as big as you think (though it certainly feels like it these days, when filling up at the pump!) As it continues to rise, I think more and more people will find alternatives, as Mike said, and it’s interesting to hear if one of these ways is through house selection… Anybody else?

[…] Wallingford « Would Gas Prices Affect Your House Decision? […]

Here’s some quick calculations I just did to calculate the monetary cost of commuting. All scenarios assume that your additional expenses were applied as additional payments to a 6.0%, 30yr loan, and that the number shown is the additional $$$ of house you could buy assuming you cut your expenses by that amount.

Fist method simply uses the cost of gas per week, and the corresponding additional loan you could get.
Weekly Gas Cost (loan)
$10/wk ($6,672)
$20/wk ($13,343)
$30/wk ($20,015)
$40/wk ($26,687)
$50/wk ($33,358)
$60/wk ($40,030)
$70/wk ($46,702)
$80/wk ($53,373)
$90/wk ($60,045)
$100/wk ($66,717)

The second method uses the IRS 2008 mileage reimbursement of $0.505/mile, which is designed to show gas/wear+tear/maintenance/insurance/etc. Note that the 1mi is additional for one way, so the table calculates the return trip (1mi shown = 2miles per day). The right column shows annual mileage.

Additional Miles (one way) Annual miles
1mi ($3,335.83) 500
2mi ($6,671.66) 1,000
3mi ($10,007.50) 1,500
4mi ($13,343.33) 2,000
5mi ($16,679.16) 2,500
10mi ($33,358.32) 5,000
15mi ($50,037.48) 7,500
20mi ($66,716.65) 10,000
25mi ($83,395.81) 12,500
30mi ($100,074.97) 15,000

The third scenario shows wage costs. This scenario assumes 1hr of additional daily commute which would mean that your commute is 30mins longer each way. This does not include gas/auto costs, just your time.

Hourly Wage Time Cost
$10/hr ($33,358)
$20/hr ($66,717)
$30/hr ($100,075)
$40/hr ($133,433)
$50/hr ($166,792)

An interesting link
http://htaindex.cnt.org/
click on “Advanced” for more detailed maps

Good point. Prioritize.

Interesting post - we made a decision very similar to this last year. Here is an alternate view to the 10 bucks a week analysis.

You’re forgetting that - not so long ago - gas was priced at $2.00 per gallon. If you assume gas is going to $4 really soon, then you have a $2/gal delta.

Conservatively assume you commute 12,000 miles per year (48 miles per round trip per day), then you have, at 25 mpg, an increase of $1,920 per year in fuel costs, or $160/month.

But that’s just not the issue, really.

Now, as others have pointed out, if you had a short commute (or like me, no car commute), then you’re saving a hell of a lot more.

AAA just estimated the new cost of ownership of a compact car at $0.541/mile. Let’s use that (since it’s more recent than the IRS figure) times 12,000 miles of commuting, and you have a cost of $6,492/year, or $541/month. Plus, if you live really near where you work, you can just eliminate that second car in your family. Or eliminate both and get a Zip Car account.

If you eliminate two commutes, then double that.

One car inconceivable? It easier than you think.

You’re now well out of latte savings land, unless you drink about 1,800 lattes per year (5 per day).

Then you also have the knowledge that you’re reducing your external costs of your commute to all the rest of us (pollution, resource usage). Ah, but who cares about that? Let’s get to the good stuff.

10 bucks a week? You’re rationalizing your behavior, not looking at the true costs of your automobiles.

And, that doesn’t even get into the costs of maintaining a 3,530 sq ft home vs. a 1,540 sq ft home. Heating/cooling, electricity, watering all those extra plants, etc. etc. These costs could come easily equal the auto savings, so all of a sudden that home in the city is starting to look like a better deal all the time, with savings over $1,000 per month. Again, assuming just one car commuting.

We made this exact choice in our family. We are both now within walking distance of our work, and we’ve gone from 3 vehicles to 1. We live about 75 feet away from a small park with a p-patch, where we have a plot, and about 3 blocks from a really nice large urban park that is way way bigger than your acre - and I don’t have to mow the lawn.

Further… we have no real commute, saving us each about 1.5 hours per day - real time we can spend enjoying each other, and what the city has to offer. And because our house is smaller, we spend less time fooling around with maintenance issues, etc.

We all make our own choices, and that’s fine, but none of us should kid ourselves about the real costs of the choices you do make.

All in, we have calculated minimum savings for our family in making this move at greater than $1,700 per month - based on our homes, and our actual cars, etc. That’s $20,400 per year (conservative minimum), or about 5,800 lattes.

Or, alternatively, it pays for the increased cost of a house in the city. In our case, we split the difference and have more money to enjoy the delights of the city, or just put in savings.

OK, I’m off the soapbox.

Love the blog.

The reality of the situation is that people aren’t going to give up cars and you have to have some place to live.

Sure, you can choose to walk to work or you can choose to drive to work. The point here is to look at the *incremental* cost of the drive, not the substitution. If you were willing to drive before, the cost of gas shouldn’t keep you from driving now because it’s not that big of a difference from what you were already paying.

You know, I’m really excited to see that so many people put such careful thought in an analysis. It definitely shows that these days, buyers are sharp.

All good considerations–if you haven’t decided where to live, in which case, yeah, by all means, decide what’s important and what you’re willing to give up. My point is that if you’re *already* willing to do something at today’s gas price, than the worry of future increases should be that big of a factor.

It’s also relative, as they say. For example, because of the more open nature of the area I live in, it seems as if I live a little further out there, but it’s only 10 miles into the office. Now is that far? I don’t think so. Not when I used to live 25 miles out. Better for me, less gas, less time, less hassle, but still all the comforts of a home I want.

One man’s meat is another man’s poison…

Here’s some reading which I think you’ll all find interesting…

http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_intro

Looky Lou & Katrina,

I point out, clearly, that we all make choices. That’s fine. You can decide to do whatever you’d like, fine by me.

It’s worth noting that very few of us make those choices only once, then never think about it again. I would guess that most of the people who read this blog are likely to move more often than the general population, for a variety of reasons - wanting to move up into a better deal, whatever.

So let’s assume that we all have the ability to re-evaluate our choices in the face of changing life circumstances and exogenous factors (such as gas prices and changing real estate values).

Given that, why look only at the incremental cost? And from which point do you measure the incremental change in the cost of gas? You could say that the cost of gas has only gone up 10 cents per gallon since two weeks ago. Or you could say that in 1999 gas cost $1.20 per gallon, so it’s gone up over $2.50.

The truth is that in evaluating our choices, we need to look at the total picture. When looking at autos, that means insurance, depreciation or replacement cost, maintenance, parking cost, tolls, and yes, gasoline.

And when evaluating our housing choices, we need to look at maintenance, utility costs, taxes, etc., as well as our mortgage. AND, when looking at our housing choice, we also need to look at our related transportation costs.

If we don’t, we are not being intellectually honest.

What you’re really saying is this: I’m going to just look at the incremental cost of gasoline because I want to live in the suburbs and this helps me rationalize my choice — even when the truth is my total cost of ownership is much higher.

I don’t believe we should sacrifice ourselves on the alter of social responsibility. However, when we don’t look honestly at the true costs, we are rationalizing our choice by just choosing the factors that support our desires.

You want to live in the suburbs? Fine with me. Just don’t kid yourself about the true cost of that choice. Take responsibility for your choice.

Sorry if this sounds a bit tough minded, but I don’t really have any sympathy for rationalization in the guise of “analysis”. That’s the kind of thinking that has led us directly into the housing crisis in this country. That’s what has led us to having a tax policy that rewards buying vehicles over 6,000 with very attractive tax advantages, while giving no benefit to those who choose thrifty, gas saving vehicles. Etc., etc.

Our suburban housing infrastructure is based on the idea of $1.50 gasoline - or much less, as we built most of this infrastructure when gas was well under $1 per gallon. The truth is, we’ve screwed up. We have a very high cost, inefficient housing stock compared to the rest of the world. This places a high burden on us as a society. It was a mistake.

And we all know, low cost producers always win in the long run.

We might as well start fixing it now, and to do that we’ll have to change our attitudes. The funny thing is, cities are really cool places! I grew up in a suburb of LA, and I’ll never, ever, go back. The city is way better.

I guess that’s my $0.02.

Cheers, great blog.

Roland, your points are well taken, but my original point was based on the hypothetical situation where somebody is already willing/desiring to live a certain way, and it’s a thought about gas prices alone. As a base assumption is the willingness to do something at $3.50, instead of $2.00, but again, it’s a starting assumption…you gotta start somewhere…

Of course, when somebody is looking to make a big decision, you need to look at the total picture, as you say, but for the scope of this blog post, I’ve isolated one factor to consider, based on some assumptions, as the factors are going to vary by the individual and circumstances. For example, I’m not sure that it is more costly to live in the suburbs as opposed to the city, though I am certain that the costs of either vary for each person.

Thanks for the great comments!

Katrina,

This is my last word on this, and you can say whatever else you’d like.

Of course I understood that you were isolating the small recent change in gas prices - that was my point. Isolating one factor to consider, as you say, ignores all the other factors which far outweigh the one factor you want to look at, because that one factor makes you feel good because it supports a choice you think you need to make. But when you look at the bigger, more accurate picture, it doesn’t look so great anymore.

And consider this - every time you do nothing, it can be a big decision. Doing nothing when you’ve already convinced yourself that living on an acre in the suburbs in a house twice as big as you really need is a decision.

My point is, we should all look at our choices in an honest way, and not kid ourselves about “10 bucks a week”, because that is not anywhere near the true cost of living in the ‘burbs.

If you believe that, I’ve got lots of stuff I can sell you.

Cheers, Great Blog.