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!
5 thoughts on “My Interview on Keye42 News last night”
Pretty cool, Steve, but they could have written you name larger in the caption. At least they mentioned you by name a couple of times. Let us know if you get any actual business out of this.
the market should re-balance itself!
the closer in homes should go up in value more even more than normal due to the gas factor (greater demand for these closer-in homes) … making the outlying homes still a relative value….
Sam: No, not yet. Last time I did though, but that was with KXAN-36 and they put a link to the website from the story on their website and I had a huge spike in web traffic from it. KEYE-42 has no such link.
Lenny: You make a good point, but it doesn’t change the equation for those who already bought on the outskirts thinking that they would be saving money. Compared to what they could have purchased closer in, they are losers in the the deal.
But I like your thinking about how it may readjust moving forward.
I don’t think people who bought the homes in outter Austin area simply for saving money. Maybe they did so because 1） those homes are the ones they can afford, and 2) the outter Austin homes are relatively newer and somewhat better built in quality.
So while yeah there are some people decided the “savings” aren’t really there anymore and wanted to move inward, most people are basically stuck. They still can’t afford buying a home closer to down town even if they want to save on gas money.
People also move further out for better schools, i.e. Steiner Ranch with three exemplary rated elementary schools. Though we have good schools in SW Austin as well.