Home Buyers Unfazed by Longer Commutes

"Home buyers during the pandemic have been willing to take on long commutes in exchange for lower prices, a new analysis shows.

In some of the nation's most expensive metro areas, home prices rose faster in areas with longer morning commutes to business districts compared with neighborhoods with short commutes, according to an analysis from Zillow Group Inc. and Here Technologies.

That is a reversal from prior years, when home prices in those metro areas accelerated faster in neighborhoods close to job centers.

Analysts say the change reflects that commute length has declined in importance for home buyers, as many workers expect to travel to their offices less often. At the same time, rapidly rising prices have made affordability a bigger 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 home-buyer demand to be long-lasting. "There's a huge group of people who can work from home."

In the Boston metro area, for example, the Zillow analysis shows that neighborhoods within a 10- or 20-minute commute of a job center posted the fastest home-price growth in the metro area during the two-year periods ended in May in 2013, 2015, 2017 and 2019.

But in the two-year period ended in May 2021, home values in neighborhoods with a 70-minute commute rose 30.2%, strongly outpacing a 9.2% price gain for 20-minute-commute areas and a price decline of 2.5% for neighborhoods within 10 minutes of a job center.

"In a lot of those more expensive markets, there was a lot of draw to being close to the workplace" before the pandemic, to avoid a long commute and enjoy urban amenities, said Nicole Bachaud, economic data analyst at Zillow. "Remote work gave people the opportunity to question, 'Is this somewhere that I want to live?'"

In metro areas where the downtown job centers are traditionally cheaper to live in than the suburbs, home buyers still sought out affordability, the analysis showed. In cities such as Baltimore, Detroit and Indianapolis, home prices grew fastest in areas with short commutes in the two years ended in May 2021." [1]

1.U.S. News: Home Buyers Unfazed by Longer Commutes
Friedman, Nicole. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]22 July 2021: A.3.