real estate

Hidden costs of moving to a new home

Couple looking out towards their house and future
Highlights
  • Transportation costs can turn a cheaper home into a budget-buster.
  • Insurance and utility costs also vary from region to region.
  • Bankrate's cost of living calculator helps you compare cities.

Residents fed up with high property taxes or expensive housing may be tempted to relocate to a home in a lower-cost region.

However, Teresa Luetjen-Keeler, president of Orella Moves and a Certified Relocation and Transition Specialist in Fanwood, N.J., says people who fail to do their homework may get burned.

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"Whether you are moving by choice or by necessity, you should evaluate all the costs of relocating because costs vary a lot even within a metropolitan area," she says.

Before you move, weigh the following costs:

Transportation

After housing, transportation is the second biggest expense for most households, according to the Center for Neighborhood Technology, or CNT, in Chicago. Costs can be high whether residents drive their own cars or use public transportation.

"The first calculation when it comes to choosing a place to live should be this: You don't live your life in your home, you live it outside your home," says John McIlwain, senior resident fellow and J. Ronald Terwilliger chair for housing at the Urban Land Institute in Washington, D.C.

The CNT developed the "H + T Affordability Index" to address the link between housing costs and transportation costs in more than 300 metropolitan regions.

While homeowners generally are urged to keep housing costs to no more than 31 percent of income, CNT estimates that combined costs of housing and transportation should not exceed 45 percent of income.

Many home shoppers budgeting for a new home weigh their monthly payment, taxes and insurance, "but they don't always estimate their transportation costs," says Scott Bernstein, president of CNT.

"Many people opt to 'drive until you qualify,' driving to neighborhoods where the housing costs are lower, not considering the transportation costs associated with living far from their jobs," he says.

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McIlwain says it's a mistake to think of transportation costs purely in terms of commuting.

"For every five miles that the average person drives, only one mile is for commuting," says McIlwain. "People need to think about the compactness of their neighborhood, how far they need to drive to reach places like the grocery store, school and medical offices."

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