Lenders, realtors and finance professionals have said for years that your housing costs should never go over 30 percent of your income. But this conventional wisdom often doesn’t account for transportation costs that come with your new home.
The costs and time expended during a daily commute should be considered when choosing a home.
In fact, the most recent National Association of REALTORS® annual report on Profile of Home Buyers and Sellers Report showed that 30 percent of respondents purchased homes in 2015 to reduce commuting costs as they cited this is a very important factor in their lives.
Picking a home based on location won’t just make your commute shorter, but it could save you a lot of money as well.
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How Much Do People Really Spend On Their Commute?
Commuters can spend a lot of money traveling to their place of work. According to a survey by Citi ThankYou Premier Card, the average commuter spends $12 a day, or $2,600 annually.
However, those expenses can easily go up in some cities. For example, commuters average $16 a day in Los Angeles adding up to $3,456 a year. Chicago and San Francisco were the lowest average commute of major cities at $11.
Commuting costs are also rising. Along with the price of gasoline gradually increasing, the cost of public transportation goes up over time.
The number also rises if other members of your family are commuting. One or two additional commuters can double or triple if everyone drives separately and to different locations.
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How Long Are Commuters On The Road?
Not only does long commuting cost money, but it can also take up a lot of time that would be better spent with family and friends, or pursuing hobbies and pastimes.
The longest average commute was for those in New York City with nearly 35 minutes one way, according to a report from Trulia. That’s 1 hour and 10 minutes each day, or nearly 6 hours during one week.
Other top metros with the longest commute times:
- Washington, D.C. – 33 minutes
- Newark, N.J. – 31 minutes
- Chicago – 30.8 minutes
- Boston – 30.4 minutes
But those are averages, and many people spend one or even two hours each way to get to their jobs. Even those in small towns, people sacrifice long commutes to go where the jobs are.
How Can You Figure out Where Commuting Costs is Less?
Many times, traditional measures of housing affordability don’t include transportation costs. Transportation costs include all your driving — not just commuting – along with insurance, maintenance, gasoline and more.
Transportation expenditures are usually the second-largest cost in someone’s budget, and most home buyers don’t even realize how expensive it can be.
If you fall in love with a house but it’s a long commute to your job, then you have a big decision to make. Factor in how many hours you will be spent on your commute, then add in the cost of driving or using public transportation..
Your lender or real estate agent probably won’t even discuss your commuting costs. But it is definitely something to think about and calculate into your overall expenses.
Maybe in the beginning of your house search, ask your agent to do some research on homes closer to your jobs. You might have to sacrifice more space for less time in the car or train.
Cut Costs With The Right Mortgage
Commuting can add up, but sometimes it can pay to get a home that requires a longer drive.
Some mortgage programs can actually end up costing home buyers much less, such as the USDA mortgage. The USDA mortgage is only available to those living in “rural” areas – although many of these areas are actually suburbs of larger cities.
Those who choose a USDA mortgage have some of the lowest rates available, and they aren’t required to make a downpayment on their home.
For those wanting to live outside the city to find more affordable homes, a USDA mortgage might be the right fit.