tfl: The Flatiron Life

Christina sends along this story about, shocker to the media, people are choosing to spend less on gas. Specifically they are moving to places with shorter commutes. They are also willing to trade the uncertainty of gas prices for the certainty of higher mortgage prices.

Trading miles for mortgage dollars
But with the cost of gas hovering around $3 per gallon on average in the U.S., it’s worth considering whether a shorter commute would pay for the incremental cost of a more expensive in-city home.

Assuming a full-time job, $3 gas, 26 mpg and 50 cents a mile for maintenance and no parking fees, a 50-mile roundtrip commute costs $646.15 a month, or $7, 753.80 a year, according to the City of Bellevue, Wash.’s, Commute Cost Calculator.

Moving closer to work boosts your house-buying power. Everything else being equal, a 10-mile, roundtrip commute costs just $1, 550.76 yearly — saving about $6,200 per year, or $517 monthly. That can add about $80,000 to the total amount of a mortgage loan, says one Chicago lender. The rule of thumb: Each $250 a month you can free up for mortgage payments equals roughly $40,000 more you can borrow at current rates (using the recent national average of 6.5%), says David Kasprisin, district sales manager for National City Mortgage Co. in Chicago.

Will this be the end of the suburbs? I doubt it. But it will probably slow the expanding of the ‘burbs ahead of non-auto transit options. The couple in the article bought near a developing light rail line. The areas already services by transit will probably grow denser and hopefully some entrepreneur will find new and innovative ways to deliver new transit options where some do not already exist.

It is pretty amazing when I think about my total transit cost for work being $900 per year for the CTA. Jos and I could cut out our intra-city completely, but we drive to the supermarket when we need litter or anything else heavy, although we are talking about using a cart. Also in the he winter we might drive a bit more. For our extra-city driving we are studying the possibility of iGo cars and Megabus. Sadly our families have mostly chose to live in places poorly served by mass transit. Improving the availability of mass transit to the mid sized cities will be the next big step.