Would you add 20-30 mins round trip to your commute to save $50k+ on a house?

[BAMxi]

Alternative title: would you move to an area with less job opportunities if you want to change jobs in the future?

Trying to figure out a possible home purchase in a lower cost of living area (currently renting in neighboring town with higher COL). Would commute from lower COL area to higher COL area until/unless I found another job closer (hard to do because my job pays above average for either area).

Overall goals
-Plan to leave my job for something more enjoyable within the next year or two. Preferably self employed or freelance work for more time freedom.
-Pay off house ASAP to have zero debt
-spend more time with 10 month old baby girl before she becomes 5 year old starting school.
-Spend as much time enjoying the outdoors as humanely possible.

LCOL area Pros
-would likely save between $50k and $80k on a comparable house (could pay off house much sooner, so interest savings there as well)
-property taxes and utilities are lower in this area
-grocery prices somewhat less but probably not much
-no traffic
-Mortgage would be very low. Could put down up to 80% of purchase price, if it made sense to do so.
-Neighborhoods offer more privacy and houses are older but unique.
-Able to find houses that are not "too big" for our needs (1200-1800 sq ft). Would not have thought this would be an issue, but strangely we have struggled with this in HCOL area. Many houses that are otherwise nice are 2000+ sq ft and priced accordingly.
-could live close to the "downtown" of this area and could walk/bike to local amenities

LCOL area Cons
-Commute would be about 30 mins one way (all highway driving)
-higher fuel cost due to commute
-Smaller town means less local job opportunities for me (wife has the same or possibly more job opportunities in LCOL area, but is currently stay at home mom, and plans to be one for the next several years)
-Less options for shopping/eating out/etc *this is also a pro in my book*
-housing market not as strong, so house not as likely to appreciate quickly

HCOL area Pros
-commute would probably be about 10 to 20 minutes one way, depending on traffic
-more job opportunities nearby (though nothing really of interest I've seen come up in the past couple years). Side note: I have no idea what i want to be when i grow up.
-more "culture" (art/free activities/festivals)
-more hiking trails nearby (this is a big one for me, but there are options in LCOL area too)
-strong housing market, so house will likely appreciate in value more quickly

HCOL area Cons
-traffic
-it's a college town so there are whiny, entitled students everywhere
-would need to take out larger mortgage for a comparable house to LCOL area
-neighborhoods in this area are much less private. Contractor grade cookie cutter houses packed in closely unless you get into the $300k price range...more than I'm wanting to spend.
-increasing price range of home search in this area yields mostly larger houses of the same type....not necessarily nicer in any way..just bigger.
-Would likely end up on the outskirts of town based on our desires for privacy and our price range. Would not be close to local amenities like grocery stores.
-Many houses in our price range are either in a not so nice area of town or need some level of repair or remodeling.

Basically, I'm wrestling with whether sacrificing more of my time commuting and being a car clown for an indefinite period of time is worth it. I'm not planning to stay at my job forever, but I don't really have any firm leads on what I would do if/when I leave this job and would be moving to an area with about half the population and less jobs overall. My wife is concerned that I'm going to move us further away from my current job and then not actually find something better to do, so just be commuting and having even less time freedom. Neither location is exactly bustling with job opportunities, as neither town is an actual "high cost of living" town with tons of jobs. I'd prefer to develop skills that I could use freelancing or running my own business, which is a 2017 goal for me (and it would be easier to take a risk like starting a new biz if I had no mortgage or a really small mortgage). If it weren't for all of our family being nearby to help with our baby, we'd likely live elsewhere entirely.

[cchrissyy]

If it weren't for all of our family being nearby to help with our baby, we'd likely live elsewhere entirely.

It sounds like you're not excited about either place to live, and obviously not about your job. Here's my advice - DON'T buy a house in either place. Keep living where you are, stay near family during these baby/toddler years, and use these next years to figure out where you actually want to go and what you actually want to do. but tying yourself down to any house, anywhere, would be a mistake at this point.

[pbkmaine]

If it weren't for all of our family being nearby to help with our baby, we'd likely live elsewhere entirely.

It sounds like you're not excited about either place to live, and obviously not about your job. Here's my advice - DON'T buy a house in either place. Keep living where you are, stay near family during these baby/toddler years, and use these next years to figure out where you actually want to go and what you actually want to do. but tying yourself down to any house, anywhere, would be a mistake at this point.

This. Rent for now. Buy when the kids are ready to start school, and you know you want to be in one place for 10+ years. If you'd like, we can point you to all kinds of articles, including one by MMM himself, that argue for renting.

[BAMxi]

If it weren't for all of our family being nearby to help with our baby, we'd likely live elsewhere entirely.

It sounds like you're not excited about either place to live, and obviously not about your job. Here's my advice - DON'T buy a house in either place. Keep living where you are, stay near family during these baby/toddler years, and use these next years to figure out where you actually want to go and what you actually want to do. but tying yourself down to any house, anywhere, would be a mistake at this point.

Definitely understand that logic. It is a personal preference for us to keep our kid near her grandparents as she gets older as well. I think most of my unhappiness has stemmed from not enjoying my job and not necessarily related to a physical location. I mean obviously I'd like to live on the beach or in the mountains, but the main part of the unhappiness comes from spending the majority of my time at work and not playing outside.

[Much Fishing to Do]

"Plan to leave my job for something more enjoyable within the next year or two"  -- I think this sentence alone clinches my vote to renting only.  You might be putting such a huge unnecessary limitation on your future job options if you owned a home, and its already hard enough to find a great job without doing that....

[gimp]

Let's say 20 minutes. That's an hour every three working days, or about eight hours per month, or around a hundred hours per year. That's post-tax money too. Let's see... that's somewhere around ten years' of my hourly post-tax rate, give or take. Not a terrible deal at all. I'd still grumble about it, though.

[TightFistedScot]

My 30-45 minute transit commute (or 30 min bike ride) saved me about 500k on a house.

I live in Toronto, though. The houses more centrally located near where I work start around 1mil minimum, though often more like 1.2-1.3mil..... My house was 410k a couple years ago (now worth 600).

So yes, I do think it's worth it. I ride my bike the 10kms each way (net positive because, exercise!), and then in winter I take transit and read a book (also net positive because I get to read).

[CloserToFree]

Don't add the time to your commute.  On balance the closer area seems more desirable apart from some privacy issues and being exposed to whiny college kids (but how much are you exposed to them, really??  And don't the cultural activities etc outweigh that?). 

More broadly I second (third?) the vote for renting- what's the rental market like in the hcol area? I find that a lot of people think renting's not for them before they even scope out potential rentals on Zillow and the like, so definitely do some research on that front before you jump into buying something --esp when you're in a situation you don't really want to stay in long term. 

[Slow&Steady]

Overall goals
-Plan to leave my job for something more enjoyable within the next year or two. Preferably self employed or freelance work for more time freedom.
-Pay off house ASAP to have zero debt
-spend more time with 10 month old baby girl before she becomes 5 year old starting school.
-Spend as much time enjoying the outdoors as humanely possible.

Adding a 30 min commute each day takes away 130 hours/year from those bottom 2 goals!

[soccerluvof4]

^ agreed. Time you will never get back!

[clarkfan1979]

I would be more likely to buy the more expensive house closer to the city based on the assumption that when I am done with my job, the house will be more likely to appreciate more and/or rent for a higher amount, when I'm ready to leave/move and take another job somewhere else or FIRE.

[JLee]

I built a quick spreadsheet to calculate the cost of a commute, comparing to my current place and wherever I was thinking about going.

You can put in whatever cost per mile and cost per hour you want (I used the IRS rate and my hourly rate).  Feel free to play with it, if it'll help you at all:  https://drive.google.com/open?id=0B3jrEnwCzMqmemhXY1U4SEpvQkU

[frugalnacho]

http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

[Villanelle]

No.  I hate driving. 20-30 minutes is already the max commute I'd be willing to consider.  Adding that to any other number would not be okay for me, especially since I'd never save the full $50k due to the increased commute costs.  (Although some of that would be offset by the increase in property taxes on that additional $50k, assuming rates were the same in both locations. But then *that* might be offset by the increase in appreciation on the higher price.)

[Sofa King]

If I found a house I really liked at a great price I would move.

[cats]

Is there any possibility of getting to work from home 1-3 days/week for your job?  The commute would be much less of an issue if it was happening less often, right?

[Fishindude]

The savings on housing would not be near as important as .... is this a place I would really like to live?
I don't consider 20-30 minute drive a significant commute that is even worth fretting over.  That's just time to listen to a couple songs and have a cup of coffee.

[sokoloff]

For me, living in an area of $800K to $2MM houses, no way would I trade 20 minutes a day for $50K savings on the house. That 2.5-6% of the house price for a significantly higher percentage of my free time.

If houses were $100K vs $150K and salaries were proportionally lower, it might make sense, but doesn't nearly pencil out in a HCOL/high salary area.

[RobFIRE]

As others have said, if in doubt about what you want, just rent.

In terms of the $50k cost difference, it sounds marginal. You say either option is affordable (since you would only need a 20% mortgage on the cheaper house), and would be selling again later anyway. So really, you haven't really got a cost of $50k extra, you are paying interest on $50k extra now in order to get $50k plus any appreciation on that back when you sell again. So I'd say the choice is more like (if mortgage rate is 4%), will you increase your commute to save $2000 a year; equivalent to, will you accept a pay rise of $2500 (assume 20% tax on salary) that comes with an increased commute. So that would be something like $170 a month extra net salary for around 30 minutes a day total extra commute, $170 for 10 hours, $17 an hour, is that worth it to you? I'd say marginal.

In the bigger picture, a $50k decision, given that if you buy the bigger house you will get that $50k back again later, then becomes a best guess calculation of house appreciation versus mortgage rate versus interest rate versus housing taxes versus cost of your time, versus what would have happened had you invested that extra money that didn't go on the extra mortgage, I think it quickly becomes apparent that a few years later there are so many variables that you can't be sure what difference it will make in financial terms.