Well, maybe not a mass exodus right now but people are definitely re-thinking their commute time and cost, which may result more people moving closer to work and big cities. Many times, moving closer to the city means smaller homes, less square feet and less commute time. However, prices can be higher than in the suburbs. So, for those looking to buy a home, are you willing to pay a little more for a house to cut down on travel time and commute costs? That's the question people are asking. A move like this could be worth an additional $30,000 towards the purchase of a home...
...if you crunch the numbers right. Here are my calculations on two different scenarios. Scenario 1: assume you commute 70 miles a day (round trip) on a car that gets 23 miles per gallon. Over a 45 week year, you will have driven 15,750 miles at a total cost of $2,736 (at $4 per gallon). Scenario 2: assume you commute 12 miles a day (round trip) on a car that gets 23 miles per gallon. Over a 45 week year, you will have driven 2,700 miles at a total cost of $468 (at $4 per gallon). Scenario 2 saves you $2,268, which is $189 per month.
If you move from scenario 1 to scenario 2, you could save an additional $189 per month, which, using a present value calculation with the following factors (annual rate=6%, total periods=360, payment=-189), works out to a value of $30,022 over the life of a mortgage...or in language we can all understand, an extra $30,000 towards the purchase of a home.
++Fuel Prices Shift Math For Life In Far Suburbs [NY Times]
++Present Value Calculator
Great post, Garrett...and if you live close enough to public transportation you can give up your car altogether and save up to another $600.00/month, minus car payment, maintenance and insurance; now that there are options to using a car like the new rent by the hour cars (that include gas) it's possible to do.
Posted by: kim | July 01, 2008 at 09:59 PM
thanks Kim...great points!
Posted by: Garrett | July 02, 2008 at 08:17 AM
Wow, that is an amazing looking house in the pictur. Where did you get it from?
Posted by: Homes for sale | July 03, 2008 at 04:14 AM
It is high time we start saving money and time by moving closer to work.
Posted by: Smart Equity | July 12, 2008 at 01:02 AM
This is a huge issue in my business; we work in the service industry where we have to make trips to customer’s homes. We used to have our employees drive to work first and the go back out and start their regular route for the day. We now route everything from our employee’s homes so they don’t have to travel to the office first. By doing this we have saved close to 3% on our fuel costs.
Posted by: Matt Nixon | July 17, 2008 at 07:14 PM
Matt, great story! I think we need to rethink how we do things, especially when it comes to our energy consumption. Kudos to you and your team for thinking about new ways to run your business. That move is healthy on the environment and on your P&L.
Posted by: Garrett | July 17, 2008 at 08:43 PM
Really great story. If that's your house then I am incredibly jealous.
Posted by: Pacific Heights Real Estate | November 21, 2008 at 11:58 AM
Wondering it is looks amazing.
Posted by: Nexpider | July 24, 2009 at 01:07 AM