Higher Gas Prices can cause Lower Affordability in Home Purchases


Nobody is thrilled with the slowly rising cost of gas prices, and of course now that summer is fast approaching, we all know the prices will jump a little higher a little faster because refiners typically switch to more expensive blends at this time of year.  Then of course the taxes in Washington State makes it even higher! But how does this news tie in with housing price affordability? For those folks that commute longer distances, perhaps to the far out Hanford area here in the Tri-Cities or others in larger cities, the effect of higher gas prices can be a factor in how much of a home they can afford to purchase. Typically, transportation costs account for approximately 12 percent of the household income if you live in an “efficient” neighborhood, i.e., one with walkable streets, easy access to transit, and the close proximity of stores and services. However, when you have to drive long distances to work or to reach key services, that percentage rises to as much as 32 percent of your household income. That large of a chunk out of your income can most certainly affect your ability to buy the kind of home you thought you could afford.

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