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June 27, 2008

Tradeoffs in where you live

High gas prices are causing people to rethink many things in their lives. One is where they live. Moving closer to work and shopping is one way to reduce commuting and gas costs, but would there be any downside to doing this? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"The downside is you run up against something economists call the 'rent gradient.' And what this simply means is that locations - residential locations that are closer to centers of economic activity, be they centers of work, centers of shopping - are more valuable and more people want to be there because it does cut down on commuting costs. But therefore, they are going to cost more. So the point being that most people will find that if they move closer to their place of work, closer to where they go to school, closer to areas where they shop, they are going to find that the price per square foot of homes is higher, rents are higher for apartments. What this means is that if you have a budget for housing - you can only spend so much on housing - if you do move closer, let's say to your place of work, you're probably going to only afford less housing space. You are going to maybe have to cut down from a 2,000 square foot house to an 1,800 square foot house. So the tradeoff here is that yes, you can reduce your gas costs, you can lower your commuting costs by moving closer to where you work and where you shop and where you go to school, but what you'll probably have to give up is you will have to live in a smaller residential unit."

Posted by Dave at June 27, 2008 08:00 AM