A recent study by the Brookings Institution and the Center for Trans-Oriented Development concluded that for every $10,000 saved in annual transportation costs, a household can afford to spend about $100,000 more on a home.
(In fact, my calculations show that, if you do the basic math, the extra $10,000 would allow you to spend up to $131,800 more on a home, based on today’s 6.5% mortgage loan rate.)
What does this mean? That, if you don’t have a car, and live in the city, you can afford to buy more home with your money.
Is this partially the cause of higher condo prices in the city? Does the extra money on hand cause price inflation?
Whether or not you’d want to spend the money you save on a mortgage loan is a completely separate question, of course.