My Interview on Keye42 News last night

I received a call from a KEYE42 News reporter yesterday wanting to interview me about the impact on gas prices on suburban areas further away from Austin. I said “ok”. The link to the piece they showed is below.

Keye42 Real Estate Interview

The interesting thing to me about these interviews is how the final piece generally conveys the message intended (by me) but still misses the mark somewhat. The “$50K cheaper 30 miles out” came from an example I gave the reporter comparing the commute for a state worker who lives 8 miles from downtown in South Austin, in a 2,000 sqft home that costs $200,000 versus that same downtown worker who bought a 2,000 sqft home 20 miles further out in Hutto for $150K ($50K cheaper, 30 miles farther).

The Hutto home owner will save about $300/mo. on their loan payment by saving $50K on the purchase price of the home. But that owner will commute 40 miles round trip further each day (28 miles from Hutto to Austin vs. 8 miles from South Austin).

At 20 mpg and $4/gal, that home owner gives back $175/mo. of their lower house payment to fuel costs. The $4/day toll eat up another $85/mo. That drops the total savings of the cheaper, further home to about $60/mo before factoring in the extra wear and tear on the vehicle, added depreciation from higher miles, the value/cost of the additional hour each day commuting, etc.

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Location now has more weight in home selection

I have my first anecdotal evidence that gas prices will hurt values in far flung areas and help real estate values in closer areas of Austin. I just helped someone relocate from Wimberley to Austin. The reason for the move? Gas prices have made the commute costs unacceptable. For this individual, the tipping point was reached and the decision was easy.

Wimberley is about 40 miles SW of Austin and is a beautiful, serene place to live. My client had lived there for 7 years, on the Blanco River, in a beautiful setting, but decided to move back into Austin because of gas prices. “I’ll save $350 a month on gas” is what I was told. The tipping point.

Another example; last weekend, I drove my 12 year old daughter out to Elgin to be a “mother’s helper” for the day, keeping her 4 year old cousin occupied and entertained while his parents could actually get a few things done and have grown up conversations. I chatted with my sister in law for a while before I left. I asked “so, do you guys still enjoy being out here in Elgin”?

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Gas Price Pain – Media Hype and Consumer Illusion?

Gas PricesI just bought a new 2008 Chevy Silverado Crew Cab and have been taking some heat for it from friends and on this blog where I wrote about the purchase experience, how I got a great deal, and the experience of interfacing with dealerships.

The main themes: “How shortsighted”, “wouldn’t a smaller vehicle have worked?”, “You’ll regret it”, “gas prices will eat you alive”, etc. Even one “I thought you were smarter than that”.

Does anyone do the math on these sort of judgments? I did. Here is what I came up with.

Assumption: $3 per gallon was higher than we liked a year ago, but it didn’t generate the hysteria and behavior modification and purchase modification that $4/gal. seems to be creating, so I base my comparisons on $3/gal vs. $4/gal.

Case Study 1 – my driving habits
I drive about 1300 miles a month in the truck. It gets 15 mpg so far (same as the old one – 2001 Silverado).

That’s 86 gallons of gas per month that I purchase. At $4 vs. $3 per gallon, I’m paying an additional $86/mo. over last year to drive my truck. Nobody thought less of me a year ago. Now suddenly I’m a fool, according to some, for not taking measures to eliminate an additional $43/mo. cost of living.

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