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Greenomics and the Value of Living Close to Work August 17, 2008

Posted by DustinRJay in Calgary real estate, commute.
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I perceive a lot of value in living in downtown Calgary.  I love the quick access to Flames games at the Saddledome, downtown nightlife, shopping on 17th Avenue, and jogging along the river pathways.  Since recently moving, I have found myself walking to work and my vehicle has sat parked, except for weekend hikes.

My commute time is much shorter and my transportation costs have dropped dramatically.  For those that are considering living in the inner city vs. the suburbs I came up with an estimate of the value placed on living in close proximity to your workplace.

I considered various factors that would change if one eliminated the use of one vehicle in their household as a result of living downtown.  These include:

  • Fuel costs
  • Vehicle replacement costs
  • Insurance costs
  • Maintenance costs
  • Parking costs
  • Value one places on a shorter commute time
  • Carbon footprint

The value I place simply on living close to work over the course of 25 years is about $250,000 at a discount rate of 7%.  Also, it would result in having an extra 163 days of life not stuck in traffic over 25 years.  Furthermore, over the span of 25 years, my carbon footprint would be reduced by 76,700 kgs. ¡Qué bueno!

By doing this exercise I also found that fuel costs are relatively small in comparison to the other costs associated with owning a vehicle.  I believe that fuel costs are still much too small to encourage large fuel-efficiency improvements.

You can access the spreadsheet here and tailor it to your unique situation:

Spreadsheet Office 97-2003 version

Spreadsheet Office 2007 version

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Comments»

1. Rational Exuberance - August 17, 2008

Good spreadsheet. I personally think the best advantage of living close to work is in the time you save. In my opinion, time is much more valuable than money!

Also, when you look back over 50 years in North america, it is clear that homes close to central employment areas and along major transportation routes tend to do better in terms of appreciation than others.

Interesting point about gas prices not being large enough to change behavior. I’m not so sure that I agree, if only because it’s a psychological thing. A guy who’s used to paying $40 a week in gas, and is now paying $100 per week due to the tripling of fuel prices over the past few years, may decide next time to replace his large guzzler for a more efficient car, even if he’s only going to save $600 per year.

Also, the lower on the income pole you go, the greater % of disposable income that $600 represents. I guess that’s why we’re finally seeing major destruction in oil demand in the United States. It took gasoline prices close to $4/Gallon, but once that threshold was breached, GM couldn’t sell SUVs to save their lives (or their shareholders money)!

2. DNA - August 17, 2008

I also consider that beef prices should be about x10 what they are right now. I’m a vegetarian myself and don’t eat any beef whatsoever, so based on that, I say beef is extremly undervalued and people should pay way more for it .
Disclaimer: While a vegetarian, please be advised I work for a beef processing plant.

3. dvrvd - August 17, 2008

I might add that because you’re spending less time in a car, and more time walking, you’re likely healthier and reducing your overall stress, and thus potentially living longer. There have been many studies illustrating that living in the suburbs is not only bad for the environment, it’s also bad for your health.

Sadly, our property tax system punishes people in the core, while rewarding those people who live in the furthest, and least-expensive suburban neighbourhoods. So, inner city residents, who place the least demands on the system and live in the highest density neighbourhoods, in essence subsidize the lifestyles of people who put the greatest strain on the city’s budget.

An interesting link for you:

http://theslowhome.com/blog/index/category/Facts

4. DNA - August 17, 2008

dvrvd, propery tax is based on assesed property value.

Take this one for example.

Assesed by city at 415,500. If you take the very same property and place it in one of the suburbs, you’ll get an assesed value of what?100,000-150,000.
The only thing you subsidize is your property valuation. How would you like to take a %50+ assesed value cut for your inner city house, just to pay half tax? How would that work for you, save few thousand $ in tax and lose few hundred thousand in value?

5. dvrvd - August 18, 2008

Um, I am quite aware of how property tax is assessed. I believe you missed the point entirely — market value doesn’t take into any consideration the strain suburban living places on the city’s infrastructure. How much does a new interchange on Crowchild trail cost? How about new schools (while shutting old ones down)? Or parks, libraries, sewage systems and on and on. All to service extremely low density, monoculture neighbourhoods where the residents only pay a small fraction of the cost they inflict on the city budget.

Maybe market value wouldn’t be so bad if all of the property taxes collected in my ward (Ward 8) were actually spent in my ward. Sadly, right now it’s only a fraction.

6. dvrvd - August 18, 2008

apparently “eight” shows up as a smiley face with sunglasses on?!

7. section31 - August 22, 2008

OK first off. Someone living in the core should be paying higher taxes. There property value is extremly high first of all. Second, Since you don’t use the roads or pipeline the rural residence use then you don’t mind walking to Banff on your weekend do you?
Third, yes you use less carbon emmisions and resources per squarefoot but your propery size is a fraction of a rural resident. Can you imagine how low a tax rate you would pay living in a 700 square foot property in Okotoks…damn!

Its funny because it always the big city that has all the pollution. If people lived in capped 30,000 people per city crime, pollution, cost of living, taxes would all be lower.

Look at Calgary, the crime rate has sky rocketed since it broke 500,000 people, not to mention rising taxes and a lower quality of life.

While you may not have a large carbon foot print, the type of living you promote indirectly promotes density of pollution, higher taxes, and crime.

8. section31 - August 22, 2008

P.S. What you do to reduce your carbon foot print will have zero effect in all reality b. immigration and world population growth will far exceed the pollution you try to reduce. Its a losing cause so long as people in the 3rd world have 5 kids a generation.

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