The hidden cost of “affordability”

One of the reasons that homebuyers sometimes choose sprawl houses is that “you get more for your money” when you locate farther out of town.  (Of course, the other side of that coin is that the market values close-in, convenient locations.  That’s why they cost more, and why some sprawl advocates who claim that people “prefer” fringe locations are simply wrong.)

But the observation that people sometimes locate more inconveniently in order to find the kind of homes that they need or want at prices that they can afford is, in fact, entirely accurate.  “Drive ‘til you qualify” for a mortgage is all too often the name of the game.

What some homebuyers don’t realize until it is too late, however, is that the somewhat pricier home closer to town might, in fact, be the real bargain.  This is because transportation costs, the second largest category of the home budget, are higher in locations where one has to drive more often and over longer distances.  When one combines the cost of the real estate with the cost of living there, the true price goes down in smart locations and up in sprawl.

This has been the subject of over a decade’s worth of research, some of it sponsored by NRDC, on the subject of “location efficiency.”  And now the Brookings Institution and the Center for Neighborhood Technology have developed a web-based tool for calculating the combined cost of housing and transportation in 52 metro areas across the US.  Check it out:  it’s eye-opening.

My wife and I went to a real-estate open house in our neighborhood yesterday, just for fun. (It was a fabulous house.)  One thing you’ll see at such an event is a written declaration of the property taxes.  A prospective buyer is also entitled by law to a statement of utility costs.  I think one can make a good right-to-know argument that the average transportation costs for the location should also be disclosed, now that calculations are available. It’s only fair.