March 30th, 2015
Home prices have been going up throughout the housing recovery, so many consumers are ready to jump on a deal whenever they can find one. However, prospective homebuyers must consider the cost of transportation when they find an affordable property for sale, according to The Washington Post.
The decision to commute or live within walking distance of public transportation is a much larger consideration in today’s housing market. Home prices have risen in some metro areas, and consumers are looking further away from the city cores to find more options within their price ranges. In many cases, homebuyers stand to see noticeable savings on a mortgage – keeping them well within the 30 percent benchmark for how much income should go to housing costs each month.
Yet the Post noted that threshold doesn’t account for transportation costs, which can significantly rise as consumers increase their commute times.
How much a long commute really costs
Economists expect housing affordability to decline in the remainder of 2015 as mortgage interest rates go up, wage growth remains slow and home prices continue to climb. Consumers who are determined to purchase a home will have more reason to search out deals in the housing market, leaving themselves fewer options for affordable commuting.
For fuel alone, consumers spend thousands of dollars each year, according to Reuters. Plus, the long driving hours may strain their health, leading to indirect medical expenses. Although an optimistic future includes the elimination of the need to commute altogether, average commute times in recent years haven’t declined much.
Some solace comes from low gas prices
One upside is fuel prices are currently low, giving more consumers incentive to venture further out from the city when looking for a home. These savings also extend to utilities expenses as costs for services like heat and electricity, which are tied to gas prices, decline.
Oil-dependent markets, such as Houston, may have more affordable housing to accompany low gas prices. These markets are starting to see less homebuyer traffic as employment conditions, which respond negatively to dwindling fuel prices in these regions, have a less optimistic outlook. Consumers who are willing to stay in the market may find more favorable prices as the unfettered population of sellers tries to attract a smaller pool of buyers.
Governments could help reconcile transportation and housing
The Post explained local lawmakers could help provide more affordable housing close to public transportation. This would give consumers an option to live in densely populated areas and save on their travel expenses without paying the typical premium for big-city living.
The L.A. Times holds a similar view. The news source published an opinion piece urging Los Angeles lawmakers to promote the development of affordable living arrangements within a reasonable distance of public transportation. Currently, the city’s Metropolitan Transportation Agency, which is expanding the Los Angeles subway system, owns a substantial amount of passive land along the new rail routes. Analysts expect home values to jump in these areas once the new stations are open, and city officials want to ensure middle- and low-income residents can afford to live near these locations. Considering the agency is short on funds, the L.A. Times noted legislatures must facilitate programs to foot some of the bill.
Real estate information sites need to provide more information
In addition to city governments, the Post recommended real estate listing sites supply more candid information about transportation. Some of these sites use misleading or unclear language, such as “transportation nearby,” which doesn’t give consumers enough details to make an informed decision.
“If you put the information out and people see that inefficient locations come with the hidden extra of the cost of transportation, people who’ve been making money selling housing in those places won’t do as well. So there will be some pushback,” Scott Berstein, president of the Center for Neighborhood Technology, told the Post.