How High Gas Prices Drive Up the Cost of Housing
Sunday’s Minneapolis StarTribune examines how the housing choices of workers in the Twin Cities is now playing out in the context of today’s high gas prices. The article draws heavily on findings from CNT’s work with the Center for Transit Oriented Development and the Brookings Institution to create a new measure of housing affordability that factors in transportation costs.
The article nicely illustrates the increasing cost of transportation workers assume as they move further from the region’s core, away from neighborhoods characterized by their walkability, transit access and proximity to local services and amenities. Readers are challenged to think about just how affordable homes on the region’s edge — where land prices are low — really are now that gas prices are putting a dent in workers’ pocketbooks so severely.
StarTribune.com
Last update: April 30, 2006 — 10:27 PM
Computing the commute
With gas prices up, commuters who sought more house for their money in the outer suburbs are concerned about increasing costs.
David Peterson and Laurie Blake Star Tribune Staff Writers
Angie Rimbo and her husband were delighted to find a home of their own for $146,000 in Monticello, which is halfway between the Twin Cities and St. Cloud. It meant a long drive to work for both. But it was brand new and cost at least $50,000 less than some older ones they’d seen.
“It seemed like a good deal,” she said.
But the cost of gas “has me more worried every day. We have averaged $500 a month just for gas since we moved here last January.” Now she’s asking, “Can we afford to stay here?”
The Rimbos are hardly the only folks in the Twin Cities region who have driven and driven until they’ve found the home they wanted for the price they wanted. But now, rising gas prices are driving families such as theirs to ask some searching questions.
“Sometimes I sit in bed at night and think, ‘Oh my gosh, what if it goes to $3.50 a gallon?’” said Molly LaVigne, a 25-year-old law student who lives with her fiancé in New Richmond, Wis., and commutes to downtown Minneapolis.
A new study of the Twin Cities area commissioned by the Brookings Institution shows that transportation costs — including the need for more cars — can be twice as high in outer-ring suburban communities than in the city, where buses and light rail are available.
For example, researchers placed a typical Farmington family’s monthly transportation costs at $941. That compares to $715 in Fridley and $446 in the Longfellow and Seward areas of Minneapolis.
Home buyers are starting to understand in a rough sort of way, experts agree.
“The old maxim, ‘Drive till we can afford it,’ may be softening,” said Michael Noonan, division president for one of the top national home builders operating in the Twin Cities area and a vice president of the Builders Association of the Twin Cities. “The rising cost of gas is adding a dimension that people didn’t used to consider as carefully as they do today.”
Some organizations are working to encourage consumers’ awareness about commuting costs before they buy. In fact, the Twin Cities area may become ground zero in a national movement to help homeowners understand the true cost of home ownership.
“The problem right now,” said Scott Bernstein, president of the Chicago-based Center for Neighborhood Technology, “is that people are flying blind.”
With assistance from the Twin Cities-based McKnight Foundation and Washington, D.C.-based Brookings, Bernstein’s organization is assembling a database that is aimed at allowing people who are thinking of buying a home to type in where it is — and find out how the cost really pencils out.
The city of Minneapolis hopes to work with real estate agents to place those numbers before home buyers, right along with the purchase price.
“It’s as important a cost factor as the mortgage payment,” said Mike Christenson, the city’s economic development director. “Yet we believe people don’t really price it out. We’re intrigued by the educational value, as people promoting city life.”
Variables and lifestyle
Others question, with so many variables — size of car, age of car, length of commute — how useful the data would be in real life.
“People make these decisions not based on some index but on lifestyle: They’re trading things like a rural lifestyle for a longer trip,” said Joe DiJohn, of the Urban Transportation Center at the University of Illinois at Chicago.
Molly LaVigne and her fiance once rented an apartment in Woodbury and hoped to buy a house in St. Paul. But “the only thing in our price range [under $150,000] was tiny, tiny houses or really rundown houses in bad neighborhoods,” she said. They wound up in a four-bedroom home on a big corner lot for $125,000 in New Richmond.
“It’s kind of sad that I spend 10 hours a week on the road, but in the end, we have a large house for a great price, and we don’t have to rent anymore.” Still, they hope to move closer in when both have jobs and can afford a higher price.
The writers are at dapeterson@startribune.com and lblake@startribune.com.
©right; 2006 Star Tribune. All rights reserved.
