Do lower gasoline prices mean you should buy a house farther out in the suburbs and commute a long distance to work? This is a suggestion that some analysts have made, but there are several reasons why it may be a bad idea.
First there is the mismatch in timing. A house is meant to stand for 75 years at least. Gasoline prices may change by 10 percent from one week to the next. When purchasing a house, you have to consider the cost of transportation between the house and all the other places you will go over the life of the house. It makes no sense to look at the price of gasoline for just this week or this year. When you look at the transportation costs associated with a house, you have to guess what the costs will be for as far into the future as you dare to imagine.
Home buyers might assume they can sell the house and buy another one if gasoline prices go up again and their plans change. This is true in a sense, but the selling price of a remote house will decline accordingly when fuel prices increase, so that the price you sell the house for may be less than you still owe on the mortgage. By the same logic, it can take years to sell a house in an area that has lost its luster. Historically, this is part of the reason why there were so many banks that failed around the outside edges of metropolitan areas around 2009. High gasoline prices between 2005 and 2008 left an overhang of abandoned houses and failed shopping centers, and the banks were left owning many of these buildings with no one to sell them to. It was a disaster for dozens of banks, but for homeowners moving out of these areas, it meant losing all the money they had put in over years of housing payments and having to start over. Who would go into a situation like that on purpose?
The other obvious problem with setting yourself up for a long driving commute is the lifestyle it leads to. The commute itself takes time and may be a source of daily stress. Studies show that workers with long driving commutes sleep fewer hours on weeknights (because they get up before 6 a.m.) and as a result are more prone to the diseases of inflammation, such as diabetes and cancer. In lifestyle terms, it makes little sense to buy an impressive house that you barely see because you are home and awake for only two or three hours every evening. A suburban house might benefit other family members, but family relationships are strained by the wage earner’s absence.
Long commutes make more sense for those who already have a place to live and are scanning a difficult job market for the best jobs they can find to dig out of their respective financial holes. Working at a job that is almost an hour away by car is typically better than not working at all. However, for those who have a stable job and can choose where to live, it doesn’t make sense to look for the most remote place they think they can afford. Fortunately, there hasn’t been a big rush of people moving to the outer suburbs in these last 13 months of reduced gasoline prices, and I don’t expect it will become a major trend in the months that remain before gasoline prices go up again.