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Steve Chiotakis: Mortgage rates dropped to near all-time lows this week. A 30-year fixed interest loan carries a rate of just 4.78 percent. But your monthly payments are just one thing to consider when buying a home. Another big factor is how far your home is from work. In a bigger city, it may be closer to the job — but it’s expensive to rent or buy. Buying farther out is cheaper, but then it costs us more to get to and from work. And that can cause families some
Andrea Bernstein from station WNYC in New York reports on that struggle to pay for the long trip.
Andrea Bernstein: If you drive from New York City west on Interstate 80 for about two hours and cross the Delaware River, you’ll get to the Poconos. Once there, you can drive along the 19th-century main street of Stroudsburg, Penn., up a winding road, to the top of a small mountain.
Sound of a brook
There you’ll find a large gated community, dotted with single-family houses nestled in the woods. In the last decade, homes like these were aggressively marketed to New York City residents, like Felix Perez.
Felix Perez: I love it, you’re in the — basically, there are so many trees.
In 2003, he was living in a cramped apartment in Queens, N.Y. After someone was killed in his building, he’d had enough. He moved with his wife and three sons to Stroudsburg.
Perez: It was like I had to leave, I wasn’t thinking. I just jumped.
At $1,400 a month, his five-bedroom house felt comfortably affordable. But he wasn’t accounting for the two-hour-plus drive he’d have each day to his job loading trucks at a liquor distributor in Brooklyn. That commute costs him $30 a day for gas, $14 a day for tolls. Then there’s the car payments, the insurance payments, the maintenance.
Perez: All that adds up, all that adds up. And you don’t realize it, and sometimes, I’m like, how do I pay this stuff? I don’t even know. I do the math sometimes, and I’m like, no way.
Last summer, Perez got behind on his mortgage payments, which were actually less than his transportation costs. In hot water with the bank, he went to a credit counseling agency in Stroudsburg.
Jennifer Collins is a counselor there. She says Perez’s situation is the norm. More than two-thirds of her clients struggle to pay for their trip to work.
Jennifer Collins: It’s so much. It’s so common around here with the subpopulation of people that I meet with.
Craig Selner works with Collins. He says many clients have to take a vacation day to come get help. Their weekdays are consumed with work and commuting. Because if you drive to New York City from the Poconos, your day starts at 4:30 in the morning.
Craig Selner: You’re probably getting into work, New York, 6:30, 7 o’clock, working a full eight-hour day, and then driving back home, and doing that every day, five days a week.
When these long-distance commuters do get to his office, Selner goes over their budgets — can they cut out discretionary payments, like restaurants, entertainment? Can they consolidate debt? Are they eligible for a loan modification program? Can they stay in the city during the week? Sometimes, his clients still can’t make the numbers work.
Selner: And in some cases, we explain to them that they may need to look for employment in the Poconos, even though it’s going to be a decrease in their salary. When they compare that with the decrease that they would have in their transportation costs, it would actually end up coming out ahead.
Tough advice in a down economy. But it’s often either that, or sell the house, already devalued, because there have been so many foreclosures in this area.
Collins: I don’t know, call it $300?
Selner’s colleague, Jennifer Collins, has another piece of advice: Do the math before you buy. At her desk, her hand naturally drifts over to a calculator. She tallies up the costs of a typical commuter in Stroudsburg.
Collins: And there’s $1,312 a month and that’s not unrealistic.
There’s another way to run the numbers. Linda Young is a researcher at the Center for Neighborhood Technology in Chicago. The group has put together an online map of the whole United States. So, you can click on northeastern Pennsylvania.
Linda Young: That particular area is pink; it looks like an hourglass on its side.
On one side of the screen, you’ll see how much an average house costs in the Poconos.
Young: Housing is very affordable, just a little bit under $1,000 a month to pay a mortgage there.
But change a field in the drop-down menu…
Young: And you could click on the map, and you could see approximately $1,400 a month for transportation in that area.
That means, in this corner of Pennsylvania, the average transportation costs are nearly one and a half times the average housing costs. This is the kind of calculation Felix Perez wishes he’d done before he bought what seemed like a dream house, far, far away from work.
In Stroudsburg, Penn., I’m Andrea Bernstein for Marketplace Money.
Chiotakis: For a link to that online map — it’s called the “Housing and Transportation Affordability Index” — go to our website at Marketplace.org.
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