If you are choosing between a cheaper resale home that is farther out of the city and a pricier new construction home closer to work and other amenities, which option is more affordable? Spoiler alert: the lower sticker price isn’t always the least expensive over time.
While house hunters often dial in on list price and mortgage rates to determine a potential home’s affordability, those costs are only one part of the equation. Transportation is usually a household’s second-biggest monthly cost after housing, but house hunters rarely include these costs when choosing a home.
“Consumers are often surprised when they learn the cost per mile for driving. Most people think of it in terms of a monthly car payment or a tank of gas, but when you look at the true cost of driving, that includes things like depreciation on the vehicle and maintenance, the cost is much higher than most expect,” says Greg Brannon, Director of Automotive Engineering with the American Automobile Association (AAA).
Meanwhile, commutes are getting longer and more cars are on the road thanks to suburban sprawl and solo commuters. According to U.S. Census data, the mean one-way travel time for commuters in 2024 was 27.2 minutes, slightly higher than the year prior. The number of workers with a one-way commute that exceeded 60 minutes climbed as well.
Today’s affordability challenges sharpen focus on the “location, location, location” mantra of housing, which is part of the reason new construction homes are gaining traction with affordability-minded buyers. New build master planned communities often benefit from prime locations. Developments are increasingly being developed near major employers, transit hubs, and key commuter routes, with essential daily-use amenities close to home.
Less travel time for daily necessities equals lower overall costs. Homeowners can save a significant amount of money just by living closer to where their lives happen.
Include Transportation Costs to Measure True Affordability
Housing affordability is typically measured by the 30% rule: monthly housing costs should not exceed 30% of a household’s gross income. Housing costs usually include mortgage payment, property taxes, HOA fees (if applicable), home insurance, and sometimes utilities.
Using that metric, approximately 55% of U.S. neighborhoods are considered affordable, according to the Center for Neighborhood Technology (CNT), a not-for-profit group that studies the relationship between housing, transportation, urban infrastructure, and affordability, among other initiatives. However, when you combine housing costs with transportation costs, the number of neighborhoods that fall within affordable parameters drops by more than half, according to the CNT.
Commuting, especially if it’s a long round-trip taken daily, can easily add hundreds of dollars to monthly expenses, pushing a home that might seem affordable at first glance into unaffordable territory.
The CNT’s interactive Housing + Transportation (H&T) Affordability Index tool helps homeowners understand overall costs more comprehensively. The tool includes transportation costs with housing costs, rather than a separate expense, and suggests a benchmark of 45% of gross monthly income for these combined costs instead of 30%.
The H&T index covers 94% of U.S neighborhoods, and while costs vary between locations, one theme emerges: location-efficient neighborhoods (I.e. close to transit) are more affordable and livable. Determining Commuting Costs Commuting, especially in a personal vehicle, comes with a long list of expenses, including the vehicle itself, financing, maintenance, depreciation, insurance, gas, tolls, and parking.
In its most recent Driving Costs report, the American Automobile Association (AAA) estimates that it costs $11,577 a year, or $964.78 per month to own and operate a vehicle in the United States. While these costs are down slightly from year prior, thanks to lower gas prices and lower borrowing costs, they still add a significant expense for a household.
Vehicle ownership costs can vary, so it’s worth checking out the AAA’s online calculator.You can customize inputs like model year, mileage, driving mix (highway/city), and fuel price, and even view state-specific data. The tool provides both annual and five-year cost breakdowns.
“The type of car you drive and the number of miles for your daily commute matter much more than most think,” says Brannon.
For example, “Driving a pickup truck for a long commute may cost you thousands and thousands of dollars more than a more economical choice. This is very important to take into account when you're thinking about moving or taking a new job,” he says.
The Real Price of Commuting Goes Beyond Costs
Commuting involves other expenses and lifestyle costs beyond transportation that are worth weighing when choosing a new home.
Additional childcare, if parents need to leave home early and return late, thanks to a longer commute.
More eating out, because home-cooked meals require time that commuters may not have.
Hiring additional household help, such as cleaning, snow removal, or yardwork, if not covered by HOA.
Personal time gets stretched with long commutes, potentially limiting time to pursue hobbies, interests, and social relationships.
Health costs. Spending a long time traveling while sitting in a vehicle and in traffic adds to a sedentary lifestyle and may limit time to exercise or pursue health-related activities. Sitting for an extended period can lead to back and neck problems too.
Early morning and late nights, managing longer commuting times can limit sleep, which can negatively affect health.
There are environmental costs too, including greater greenhouse gas emissions and increased air pollution.
Other Ways New Builds Cut Transportation Costs
Beyond transit-friendly locations and shorter commutes, here are some other ways new builds can reduce transportation costs:
Walkability. Many new build developments are designed to be walkable, meaning you can leave the car in the garage for recreation, socializing, and running errands, saving further on gas and wear-and-tear costs.
Design that makes working from home easy. Many new builds feature private, dedicated home office space, or flex space that converts easily to a home office, creating productive, comfortable space to work from home, no commute required.
EV ready. New builds often have EV chargers, or are pre-wired for them. This can reduce transportation costs for the homeowner, as well as boosting resale value.
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