Friday, April 25, 2008

The real price of commuting is $57K

I was thinking this evening about the cost of gas. After a few glasses of cheap red wine I came up with this analysis. Disclaimer, this is for entertainment purposes only!

With gas knocking on the door of $4 a gallon how much extra is that house in the OC worth for us commuters? Let's face it a large percentage of the IE workforce commutes into the OC or LA to work. We all know the reason, those areas pay more. But with the price of fuel going through the roof is it still worth it to drive 100 miles a day?

For arguments sake, let's say you have a 50 mile commute each way. That's 100 miles a day you are driving. The average MPG of the average vehicle is probably 25mpg. That means the average car is burning 4 gallons per day. At $4 a gallon that is $16 a day just in fuel. That works out to $336 per month on fuel. I'm not factoring in wear and tear on you car which probably adds another $50 a month. And god forbid you use the Fastrak lanes on the 91fwy, that can add another $200 a month easy.

The difference in the price of house you can buy is about $57,000. You can buy $57,000 more house if you live close to work and have the same monthly expenses for Mortgage and Fuel. Of course you are still probably going to have to drive a little bit. It's amazing to see how much difference it can make living close to work. ( I check the numbers on loans from $300k to $500k at 6% and its roughly $57k difference in the loan amount with a $336 payment delta).

Another way of looking at it is that you can take a job in the IE, close to home making $2.00 and hour less and end up with the same amount of money at the end of the month. And a whole lot more free time!

The only problem is that homes in the OC/LA are WAY more than $57k higher than IE homes of equal size. So it looks like the commuters will still be making the daily trek....


monkeyking79 said...

finally, there is somebody who did an accurate math on the price of gas. i am so happy to see this. not like those who has no idea if his or her calculator does not work will look at the number and has absolutely no idea. this is why i have trust on you. Mr. Golfer_x.
i am doing all these calculations even sometimes i do not have those numbers you have from some scouses.
so you think the foreclosure in Corona area will be under 100$ per sqf. because i already saw some of the over 3600 sqf home is priced under35ok. is it still rooms for them to fall? or should i wait because there are going to be more choices in this range?

elastin said...

I am looking to buy in Eastvale. However they have what you call Special Assessments. What is the difference between this and mello roos. Are either one tax deductible?

golfer_X said...

Mello Roos and assesments are NOT tax deductible. Many people do mistakenly (or on purpose) write off mello roos taxes but they are not a legitimate write off. You can only write off the regular property tax.

Special Assessments are generally fees charged by the city or home owners association for some service or improvement (like landscaping around your tract etc). If it's a city assessment it will usually be rolled into your property tax bill.

colleeeen said...

this is part of why we bit the bullet and bought a townhouse in OC (back in 2002) instead of a big house out in Corona or Chino or wherever. we sucked it up and bought a small place near work. the other part is time - we like to be at home together and 2 hours or more of daily commuting becomes 10+ wasted hours during the work week.

bigdog76 said...

Are there any areas in the Corona area that do not have HOA?

Martin Burtin said...

BigDog, If all you want to avoid is HOA, just look for older areas and areas where there are custom built homes, but not behind gated entrances. Most big tracts built since the '70s will probably have a HOA. Personally, taxes bug me more than HOA.

If you get some amenities that you will enjoy and use, the HOA fee is not hard to swallow. For me personally, I don't have kids and I try to avoid areas with Mello Roos and other parcel fees that pay for schools and new fire depts and police.

Yeah, I'm just a cheap bastard, but those agencies and need to suck it up just like the rest of us. I'd rather invest in a gun, a fire extinguisher, and few books, than trust the Gummint to to educate me and protect me. Oops, guess I'm off topic and ranting, sorry. (sorta)

I'm Not POTUS said...

Don't forget that time is money.
Not many people get paid to drive to the office.
That is about 4 hours a day of lost time. If you max out your OT hourly job, you cut into time for other chores and sleep. Your spouse has to make up your lost productivity at home. This might mean extra day care costs because your on the fwy. You can pile on all kinds of extra expenses, if you really think it through.

One more thing about special assesments, they are due until paid off. If the assesment was calculated out to be paid by 1500 parcels and only 500 got built, guess what you just got nailed for 3 times as long to pay off your share. Even worse if 250 of those parcels are defaulted, those costs pile up.