Remote Work Pushes Home Prices Up Faster in Car-Dependent Areas

Remote work is pushing up home prices in areas that may not be as friendly for commuters.

A new report from Redfin says that home prices in car-dependent areas have risen twice as fast as those in transit-accessible areas since the start of the pandemic.

In car-dependent areas nationwide, the median home-sale price has increased 32.8% to a record $418,100 since January 2020. In transit-accessible regions, it has risen 15.6% to a record $540,500 during the same time period.

The increases in car-dependent areas are significant and indicate overall demand for homes driven by the pandemic and low mortgage rates. But Redfin says the growth of interest in houses in suburban and rural car-dependent areas also signifies the rise of remote work. Consumers can now prioritize affordability over commute times. In fact, Redfin searches for rural areas and small towns have spiked since last spring.

“Since the start of the pandemic, there has been a huge influx of people moving out here from the Bay Area, and the reason is simple: The houses are bigger and the prices are lower,” said Steven Majourau, a Redfin agent in California’s Central Valley, located east of San Francisco said in a prepared statement. “For most people, the tradeoff wouldn’t have been worth it two years ago because of the hours-long commute into San Jose or San Francisco every day, either by train or by car. With remote work, buyers can prioritize the actual home above its proximity to transportation.”

In May, 56% of homes in car-dependent neighborhoods sold for above asking price, versus 36% of transit-accessible homes. While the typical transit-accessible house sat on the market for 38 days, the typical home in a car-dependent neighborhood was on the market for 19 days before going under contract.

“Remote work has allowed many homebuyers to leave cities for far-flung suburbs. Those suburbs often lack public transit, so new residents drive more often,” said Redfin Chief Economist Daryl Fairweather. “Hopefully, a less frequent commute will mean fewer hours behind the wheel.”

However, as offices open back up, Fairweather says commuters who used to live in the city and use public transit could spend more time driving and emitting more carbon.

Many of those workers will come back to cities like New York. An office survey conducted by the Partnership for New York City found that 62% of office workers expect to be back in the office by Labor Day. In March, only 45% of workers had the same expectation. This shows the rapid pace of the recovery, due largely to vaccinations.