I had a conversation with another couple of agents the other day about the cost of gas.  The conversation turned to home buyers.  What was discussed was whether or not home buyers will start to look closer to places of employment rather than areas they might like to be for other reasons.  After all, we are all paying a whole lot more just to drive to work than we were a year ago.

To start with, let’s think about where the price of gas will be a year from now and beyond.  Current oil consumption worldwide is greater than oil production.  With economies in China, India and other developing countries roaring along, that consumption is likely to remain high.  As much as people complain about gas prices being so high, many of these same people are against pulling more oil out of the ground in ANWR and offshore in the States.  If all of this stays the same, prices will probably continue to rise.

So where will people decide to live in a city like Austin?  There has been talk about people living closer to work or living downtown if they work downtown.  There has been talk about people doing more telecommuting.  There has been talk of working longer hours each day and having a shorter work week.  So let’s look at some numbers.

Example: Jane works 5 days a week 48 weeks a year, that person will work 240 days.  Jane has a car that gets 20 miles per gallon.  Gas is now $5.00 per gallon compared to $2.50 per gallon two years ago.  Jane commutes 20 miles each way to work.   Jane is spending $2400 a year on gas compared to $1200 a year ago.  That hurts!  If she moves closer and has a 10 mile commute both ways, she is back to $1200 a year.  Is that actually worth moving for?

Let’s say that Jane lives in Cedar Park and commutes to downtown.  The commute is 23 miles both ways.  Using the same figures as above, Jane will spend $2760 a year on gas.  What will she do?  Jane will probably cut expenses elsewhere in order to be able to pay for all that gas.  She may also decide to carpool and share the expense.  She may start taking light rail when it is built.  The cost of the light rail will probably be much less than the cost to drive.

As much as we Texans love to drive and as much as we love our big cars, something has to give.  However, I don’t see people relocating closer to work.  The cost of housing around someone’s place of employment may be higher than where someone would otherwise live.  The neighborhoods around or close to a place of employment may be less desirable than other areas for a variety of reasons – schools, safety, amenities, etc. 

If gas shoots up to $5.00 a gallon, I don’t see the Cedar Park to downtown scenario changing.  If things get really outrageous and gas goes to $10/gallon, that might really change things.  But we’re pretty innovative folks and we have usually manged to find a way around just about everything.