For homebuyers, commuting times are decreasing in importance, new data shows
Homebuyers during the pandemic have been willing to make long trips in exchange for lower prices, new analysis shows.
In some of the country’s most expensive metropolitan areas, house prices have risen faster in areas where morning trips to business districts are longer than in neighborhoods with short trips, according to a group analysis. Zillow. Inc.
This is a reversal from previous years, when house prices in these metropolitan areas accelerated more quickly in neighborhoods close to employment centers.
Analysts say the change reflects commute times less in importance to homebuyers, as many workers expect to visit their desks less often in the future. At the same time, the rapid rise in prices has made affordability a major concern for many buyers.
“It’s been a big change,” said Ed Pinto, director of the AEI Housing Center at the American Enterprise Institute, who expects the shift in homebuyer demand to be sustainable. “There are a lot of people who can work from home, and they will continue to work from home when things get… normal. “
In the Boston metropolitan area, for example, Zillow’s analysis shows that neighborhoods within 10 or 20 minutes of an employment center had the fastest growth in home prices in the Greater Montreal area. during the two-year periods ended in May 2013., 2015, 2017 and 2019.
But over the two-year period ended May 2021, home values in neighborhoods with a 70-minute commute rose 30.2%, far outpacing a 9.2% price increase for areas of 20-minute journey and a 2.5% price reduction for neighborhoods within 10 minutes of an employment center.
Neighborhoods with trips to employment centers of 50 minutes or more also showed the strongest price growth over the two-year period ended May 2021 in New York City, San Francisco, Los Angeles, Washington, DC and Seattle, according to Zillow’s analysis. .
In all of these higher-cost metropolitan areas, neighborhoods with longer trips had lower median house prices than neighborhoods close to employment centers.
“In many of these more expensive markets, there was a lot of appeal in being close to the workplace” before the pandemic, to avoid long journeys and take advantage of urban conveniences, said Nicole Bachaud, economic data analyst at Zillow . “Remote working has given people the opportunity to ask, ‘Is this a place I want to live, or is it where I live because my job is here? “”
In metropolitan areas where downtown employment centers are traditionally cheaper to live in than suburbs, homebuyers have always sought affordability, the analysis showed. In cities such as Baltimore, Detroit, and Indianapolis, home prices have risen the fastest in short-commute areas in the two years ended May 2021.
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Zillow used data from the Census Bureau to select postal codes that function as employment centers and data from location data company HERE Technologies to determine travel distances. Distances are based on local trips Monday at 8:00 a.m. at the end of May 2021.
Employers and real estate executives are watching closely to see if consumer preference for affordability over a short commute is a trend that will last beyond the pandemic. In some industries, workers expect to work from home at least part of the time in the future. But many companies still determine their work policies remotely, and workers might regret long commutes if they have to visit their offices more often than expected.
Travel times vary by metropolitan area, but they had increased before the pandemic. The average commute to work in the United States took 27.6 minutes in 2019, up from 25.3 minutes in 2010, according to the Census Bureau.
The increase in remote work could reduce commute times overall, if fewer workers head to city centers during peak hours. But as homebuyers move to more remote neighborhoods, they’re also likely to be more dependent on cars for their local trips.
Nationally, median house prices in areas with few transit options increased by 32.8% between January 2020 and May 2021, while house prices in neighborhoods accessible by public transport. common grew by 15.6% over the same period, real estate broker Redfin Corp.
said earlier this month.
Eric Vlach moved with his family from Manhattan to Ridgewood, NJ, in August in search of more living space. One day a week, he drives to his Manhattan office, where his employer pays for parking at a local garage. But in September, he will have to spend more days in the office and the parking lot will no longer be covered.
Mr. Vlach plans to switch to public transit, which would take over an hour each way.
“The hour and 36 minutes didn’t look so intimidating last year. We had so many other things in mind ”when we decided to move, he said. “If I had to do it all over again, maybe I would focus a little more on [the] commute, but it’s way too late for that.
Write to Nicole Friedman at [email protected]
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