Those of us lucky enough to live in Northwest Lower Michigan are keenly aware of the intrinsic value the natural surroundings possess, but our lives come with some energy and transportation costs. Our communities are far between each other and the climate here tends to be cooler than our neighbors located further south in Michigan’s Lower Peninsula. So, how can we live among these gorgeous natural settings and manage the cost of living without going broke? Questions like, what do we really need to know before buying a home, and what can we do make our cost of living more affordable have become very important.

For years the home affordability calculation has been based on a formula of 4 elements – Principal, interest, taxes and insurance, or “P.I.T.I.”. But, Kim Pontius, Executive Director of Traverse Area Association of Realtors (TAAR) suggests that we should update our thinking to include two more important areas of consideration for home affordability; we should also be focused on the variable costs of energy and transportation.

First consider the variable cost of home energy. Energy costs are the utilities like natural gas, propane and electricity we all pay on a monthly basis. Due to dramatic rising commodity costs and increased market volatility, these costs have increased and continue to have a greater impact on the cost of living for homeowners. What do we do about it? Pontius says start by looking at the quality of the home’s envelope (the foundation, roof, walls, doors and windows) when estimating the cost of energy for a particular home. If you can determine the type of material used and the age, you can begin to estimate how much it will cost to heat and cool a dwelling. The best way to determine the variable cost of energy is to obtain a H.E.R.S Rating (Home Energy Rating System), which will help to establish a budget for energy cost. The HERS rating index was developed by RESNET and is the nationally recognized system for calculating how energy efficient a home is. The lower the HERS Index score, the more energy efficient the home. For builders, building then marketing a home with a H.E.R.S rating is a great way to help potential buyers learn about the cost of living for a particular dwelling. If a rating is not available or outside a buyers’ or sellers’ budget there are several other low cost or no cost ways of determining the variable cost of energy for most any home. (To find a HERS professional, do a web search for energy auditors in your area.)

A second and perhaps more surprising variable cost of home affordability is transportation. The old adage of “drive till you can afford to buy” has certain relevance here in NW Lower Michigan. Many homeowners live several miles from town. Pontius points out that the familiar axiom may have outworn its welcome. He says today “you can drive and still not be able to afford to buy because your transportation costs have now exceeded your transportation budget.” He adds that the transportation element of home affordability affects not only the homeowners’ budget but also their quality of life, especially for people with children. Countryside families that live, say, 10 miles from school and 20 miles from town, rack up thousands of miles on their cars (repair bills and replacement costs), pay thousands of dollars in gas expense and spend hundreds of hours a year riding around in the car.

Still another way to look at home affordability is to consider the amount of living space a homeowner needs and what amount is considered waste. The term waste used here means unused or underused space in a dwelling. A decade ago housing trends were centered on large opulent ‘McMansions’ with lots of space and amenities. Today, the housing market has come full circle and is responding to consumer requests for smaller building footprints with low operational costs in walkable communities. It is difficult to say how long this current trend will continue, but one thing is for sure, since the housing bubble burst in the middle of the last decade, the issue of home affordability has become more important to home owners and buyers.

Whether you are a first-time home buyer or a homeowner looking to downsize into your last home, it is important to factor in the principal, interest, taxes and insurance, but maybe even more important to know what it will cost you to actually live in a home after the closing. The variable costs mentioned above are especially important if you are raising a family.

The writer wishes to thank Kim Pontius, Executive Director of TAAR for sharing his insight and expertise about home affordability. For more information about managing home affordability please visit

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