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Should home listings include transportation costs?

Posted by Scott Van Voorhis March 24, 2010 10:38 AM

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Maybe you've dreamed of escaping the Greater Boston home price squeeze, of buying a nice house at a reasonable price in some little town beyond the I-495.

I certainly have at times, looking for any escape hatch I could find in this crazy, overpriced housing market of ours.

Nice fantasy, but the reality isn't so pretty. You may score a cheaper house, but if you are still stuck commuting to a job back in the Boston area, you could be putting yourself at greater risk of foreclosure, warns an influential Chicago-based research group.

The Chicago-based Center for Neighborhood Technology has come out with a new study on true housing affordability, in the Boston area and across the country.

The message is simple. If you take into account car and gas costs, the second biggest item in most families' budgets, outer suburban towns with more affordable home prices don't look like such a bargain anymore.

In fact, CNT has previously done a series of studies in the Chicago area and other major markets that point to a correlation between escalating gas prices and rising foreclosure rates in distant suburbs.

More importantly, the group, which is working hard to get the ear of federal regulators down in Washington, is lobbying to require MLS systems in Massachusetts and around the country to disclose transportation costs on home listings.

It's certainly an intriguing idea - especially if you take into account the argument that transportation right now is a hidden cost most home buyers fail to fully vett before signing up for 30 years of mortgage payments.

Once transportation is taken into account, the number of neighborhoods across Greater Boston considered affordable to the average home buyer plunges to 52 percent from 64 percent, the group contends.

Here's how CNT is making its calculations.

A family making the Boston area median income - $55,183 - should pay no more than 30 percent of income on housing costs and 15 percent on transportation, the group argues.

But the reality is much different, with the farther out you go into the suburbs, the higher the transportation costs go, wiping out any potential gains from lower home prices. Transportation costs rise from 9 to 12 percent of family budgets in Boston and its neighborhoods to 19 percent to 20 percent once you get out to Framingham, Walpole and Bellingham, CNT contends.

That said, there are some quirks in the data. CNT relied on census data from 2000, including home price and median income info, Scott Bernstein, the group's president, told me last night.

That was jarring to hear at first, but the fact is home prices are heading back to 2000 levels while incomes, after a pretty terrible decade, haven't really gone anywhere either.

He explained the reason for using the 2000 data is that it is broken down on a neighborhood by neighborhood level. While the US Census Bureau has been updating its numbers, a similar micro view won't be available again until after the 2010 census.

Whatever the case, if the study, flaws and all, prods prospective home buyers to make some realistic assessments of their transportation costs, that's hardly a bad thing.  I certainly never did a calculation on commuting costs before I bought my home in Natick back in 2002. Before I left the Herald in 2008 to work full-time as a freelancer, my wife Karen and I were easily shelling out at least $100 a week on gas alone.

And as the economy kicks into gear again, it's only a matter of time before gas prices start soaring again.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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