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.
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.
Even before $4/gal gas I’ve always preached for buyers to stay as close in as they can afford in Austin. Also, the south Austin home is appreciating in value while the one in Hutto is flat or falling in value. If gas hits $5/gal, the purchase price advantage of exurbs such as Kyle, Hutto, Georgetown, etc. will have completely evaporated for the home owner commuting to Austin and back each day. Investors and first timers who thought they were making a good purchase decision may find that those far away homes become just as undesirable as a used Suburban that gets 12mpg!