Housing & Mortgage
One Key to Affording More House: A Shorter Commute
Living far from work is far costlier than most drivers realize
Living far from work because housing close-in is too costly? There’s a very good chance you could actually save money and live closer — if you scrupulously calculate your commuting costs.
Let’s assume you’re bang-on average, according to data from the American Community Survey: You drive alone, for 27 minutes each way, five days a week, over a distance of about 13 miles. If you’re paying $2.00 a gallon for gas, plus $10 a day in parking, you’ll spend about $2,800 each year on fuel and parking alone.
But the greatest costs slip by unseen. The price of that same “average commute” more than doubles to nearly $6,200 a year when you include the costs of keeping and maintaining a car, according to AAA estimates. With the U.S. median household income currently sitting at about $60,000 a year, that’s more than 10% of pre-tax income eaten up by commuting.
For the past 40 years, American commutes have grown steadily longer and more expensive, due to a combination of rising housing prices and more severe congestion in most metropolitan areas. It hurts more than just our wallets. A 54-minute round-trip journey equates to more than nine days in a car per year, assuming two weeks’ vacation and the occasional federal holiday. On a biweekly basis, that’s nine hours of travel time — a whole extra work day that you aren’t being paid for.
Factor in psychic wear-and-tear and the well-documented health impact of prolonged sitting on blood pressure, stress and heart disease, and it’s no surprise that nearly 49% U.S. workers in a survey last year said they hated their daily commute.
If you’re planning a move, consider spending more on housing to spend less on commuting. Trimming your 13-mile commute down to five miles could save you $2,300 a year, or almost $200 a month. Accepting a longer commute of 30 miles, meanwhile, carries with it a total cost of more than $11,000.
To calculate the full cost of your commute yourself, begin by working out your annual mileage. A 20-mile round-trip commute works out at 100 miles a week or roughly 5,000 miles a year, assuming two weeks’ vacation. If you drive a midsize car, with gas mileage of 29 mpg, that’s 172 gallons of gas a year, for a total cost of $344 in most metropolitan areas. Next, add your parking. Over 50 weeks, a charge of $10 a day works out at $2,500 a year. (The University of California at Santa Barbara’s commuter calculator does all this handily.)
Finally, multiply your original mileage by 0.608 — the cost in dollars per mile for car ownership, according to AAA data, which includes maintenance, insurance and depreciation. Five thousand miles, for instance, has a total cost of about $3,000. (Depreciation depends on the original cost of the car and other factors, so you can check your model here.)
Add the three together — fuel, parking and car ownership costs — to get a total annual estimate for your commute. Altogether, our example 10-mile commute costs $5,700 a year.
Taking the time to do the math could save you thousands of dollars. Take Phoenix as an example. The family-friendly neighborhood of Deer Valley has a median home value of about $275,500. But the 17-mile commute to downtown Phoenix adds on an extra $7,400 each year — a surcharge of sorts of nearly $620 a month — onto your rent or mortgage.
Living more centrally might cost you more upfront, but less in the long run. Situated three miles from downtown Phoenix, Encanto has a median home price of about $40,000 more than Deer Valley, at $315,000. But its central location and good transit links make it somewhat of a bargain. Tackling this commute by car costs $3,400 a year — a savings of $4,000 compared to Deer Valley.
You’ll save even more if you opt to leave the car at home (or sell it) and take the train. A monthly light-rail pass costs $64 a month, ultimately saving you $6,800 a year, compared to the cost of driving from Deer Valley.
A mortgage with an additional $60,000 principal, at 3.75%, would add about $278 to your monthly payment.
There’s another still cheaper alternative, of course. The 872,000 Americans who cycle to work, per the 2018 Census, pay no real costs beyond the initial price of buying a bike. Perhaps more interesting, cyclists seem to love the journey. A recent survey of more than 1,000 workers, carried out during coronavirus lockdowns, found that 91% of bike commuters said they missed at least some element of their commute, compared to 45% of car commuters.