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How does the rising gas price affect the housing market?
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Question:What effect does the rising gas price have on the housing market?
Answer:It is quite possible that people start to move closer to their work place. In the past people chose to live in suburbs because housing was cheaper there and the cost of the commute was small.
As the gas prices go up, residential areas close to workplaces will be more attractive.
I personally do a 100 miles roundtrip commute. If I would do this 5 times a week (I don't) with a car achieving 22 mpg (my car gets 45 mpg), then I would use 500 miles / 22 mpg = 23 Gallons per week or 100 Gallons a month.
Let's say I'm married, and my partner drives a similar distance but we cannot carpool, that makes 200 Gallons a month.
With the gas price going up from $2.00 to $3.00 to $4.00 that means monthly expenses going from $400 to $800 a month.
Those extra $400 a month can buy a bigger mortgage. Living closer to work also means less time lost on the freeway, less money spent on car insurance, less wear-and-tear on the vehicles etc.
Currently, $400 a month will get you something like an extra $100k of a loan. That is in some areas even more than the difference of living.
Personally, I think telecommuting is the way to go.