New Homes in Vail AZ | Does driving to qualify make sense?

  

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Historically the pricing of homes within an urban center have been more expensive than houses on the outskirts of a city for one simple reason; homebuilding costs.  The fact is that building a home in the city is simply more expensive.  From land costs to permitting to impact fees to construction…they are all higher within the urban core.  The land and impact fees alone may add $40,000 to the price of a new home.

So homebuyers have had to choose between a more expensive (and more convenient) home in the City versus a cheaper house farther away.  Hence the term “driving to qualify” as the farther you drove the cheaper the houses became.  Examples of this are subdivisions in Red Rock, Star Valley and even Benson.  Homes in these areas will in general be in the low 100’s rather than the 200’s for in city property.

But as they say times are a changing. 

Today and in the future it will be necessary to include transportation costs in the overall calculation of home costs.  Not only will the mantra of location, location, location be for the general aesthetics of the neighborhood but also how far away the house is from the services and destinations you frequent.  Let’s look at a quick comparison of living in Vail and comparing that to living in the city (for example; Mesquite Homes at Riverbend).

Assumptions

• $4 gasoline with a car obtaining 25 miles per gallon
• Working and playing in the middle of the City so averaging one daily trip.

Conclusions

• 30 miles of additional driving per day or 36 gallons of gas per month
• Extra gas expenditures of $144/month after taxes (36 x 4 x 12)
• Assuming a 33% tax rate monthly pretax expenditures for gas is $216.
• In today’s mortgage environment (5% interest) this $216 per month would be the same as paying the mortgage on an additional $40,000. 

Based on the above simplified scenario the total out of pocket cost for a $160,000 house in Vail would be the same for a $200,000 home within Tucson’s city limits (including gas). 

Location, location, location.   Something to think about.