Author Topic: Cost Of Commuting When Looking At Places To Live  (Read 2933 times)

CBnCO

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Cost Of Commuting When Looking At Places To Live
« on: July 21, 2014, 05:24:46 PM »
I'm trying to determine the best way to figure real commuting costs.  In this case, we are weighing a house in the suburbs, 24 miles from office, versus a house in the city that is within 4-5 miles and would allow for biking and public bus.   Aside from the typical lifestyle differences between urban and suburban living, I'm trying to rationalize the theoretical cost savings of not having to have a second vehicle and the 24 mile each way commute versus the cost of real estate in the two locations.

Using some rough math, I'm estimating a second vehicle and it's operating costs on the commute and other additional driving the burbs will require would be at least $400-$500 monthly..does this sound right for an average car?   And, if so, this represents about $150K in mortgage loan interest costs per month.  Thus, is it reasonable to use this amount and logic when comparing housing options (we are looking at buying; but, could obviously be translated to rent as well).   EX:  A $300K house in the city is cheaper than a $250K house in the suburbs when the car costs are factored in.  Make sense?

Anyone else consider this when choosing a location and does anyone see a flaw in my logic or have a better way to look at this?

marblejane

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Re: Cost Of Commuting When Looking At Places To Live
« Reply #1 on: July 21, 2014, 05:49:38 PM »
Have you gone through the math MMM outlines in this article? http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

rmendpara

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Re: Cost Of Commuting When Looking At Places To Live
« Reply #2 on: July 21, 2014, 07:53:12 PM »
I'm trying to determine the best way to figure real commuting costs.  In this case, we are weighing a house in the suburbs, 24 miles from office, versus a house in the city that is within 4-5 miles and would allow for biking and public bus.   Aside from the typical lifestyle differences between urban and suburban living, I'm trying to rationalize the theoretical cost savings of not having to have a second vehicle and the 24 mile each way commute versus the cost of real estate in the two locations.

Using some rough math, I'm estimating a second vehicle and it's operating costs on the commute and other additional driving the burbs will require would be at least $400-$500 monthly..does this sound right for an average car?   And, if so, this represents about $150K in mortgage loan interest costs per month.  Thus, is it reasonable to use this amount and logic when comparing housing options (we are looking at buying; but, could obviously be translated to rent as well).   EX:  A $300K house in the city is cheaper than a $250K house in the suburbs when the car costs are factored in.  Make sense?

Anyone else consider this when choosing a location and does anyone see a flaw in my logic or have a better way to look at this?

Consider the marginal cost of total cost/mile [gas and maintenance], etc.

The best way to consider this is to assume that you would own your cars in both situations, so the true difference is how much you would spend additionally is going to be gas + maintenance (both short term and long term). Depending on your car, a mid size sedan is likely $0.15-0.30/mile (excluding depreciation... which is just an imputed fixed cost).

There are some sites that can help you do this, search around Google and you'll find plenty.

You can also just come up with a very accurate cost in Excel by calculating salvage value in X years, your insurance rate, your maintenance according to the mileage recommendations, etc.
« Last Edit: July 21, 2014, 08:00:34 PM by rmendpara »

gimp

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Re: Cost Of Commuting When Looking At Places To Live
« Reply #3 on: July 21, 2014, 09:28:25 PM »
Seems like a decent way of looking at it. If we assumed your time is free, we could say that's about 40 miles per day, or around $20 per day according to the US government, which is around $400/month. A slightly more realistic price would be $250-300/month. I'm not sure that's a $150k difference, though.

defenestrate

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Re: Cost Of Commuting When Looking At Places To Live
« Reply #4 on: July 21, 2014, 09:34:58 PM »
I quickly made a spreadsheet to do some calculations on the total opportunity cost of driving. I have ignored insurance, as I (wrongly) assume that the car is already necessary. Change the inputs around and see what you come up with. I have left the sheet open if anyone wants to modify.

This is just for fun, so not looking for critical feedback, please just go ahead and make the spreadsheet better if you have some ideas.

https://docs.google.com/spreadsheets/d/1UiH67I5Je97nuoyvHYSjSekZTamDIATBNw2Kgfrx3ks/edit?usp=sharing


YoungInvestor

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Re: Cost Of Commuting When Looking At Places To Live
« Reply #5 on: July 22, 2014, 05:56:25 AM »
First, let's say biking costs you 3 cents a mile, Public transportation 2$ a ride, and let's say you'd do 1/3 biking and 2/3 Public transport.

Let's also say you work 45 full weeks a year (225 days / 450 trips).

Bike/Public transport for 4 miles = 450/3 * 4 * 0.02 + 450*2/3 * 2 = 618$. (Could be as low as 54$ via biking).

By car, you'd do 24 miles * 450 = 10 800 miles a year.

If your cost per mile is higher than 6 cents (Which it is, probably by quite a bit if you hit traffic), the bike/PT is cheaper.