Real Estate Marketing & Beyond
Americans are increasingly showing a preference for affordability over shorter commute times, as the price of homes within easy reach of downtown job centers grows more slowly than those that are further flung, a new study has found.
The analysis from Zillow and maps provider HERE Technologies notes that short commute times have always come with a more expensive price tag. Homes that are located conveniently close to employment centers traditionally cost much more than those that aren’t. But in the last year that has changed as remote work becomes more commonplace.
Zillow found in its analysis that homes located within a 10-minute commute of downtown job centers were among the most expensive in 18 of the 35 metropolitan centers it looked at. Those same homes had the fastest-growing values in 9 of those 18 metros back in 2017. However, Zillow’s study found that homes close to downtown are growing fastest in just three of those 18 metros now.
Zillow Economic Data Analyst Nicole Bachaud said the data is clear evidence that home buyers place less of a premium on short commute times, something she attributes to remote work. Instead, Americans want a home that’s more affordable and has more space, whether that’s an extra bedroom or more outdoor space.
“In expensive, dense markets, that usually means a home farther out from the downtown core, which is more palatable when you don't need to commute every day, if at all,” Bachaud said. “In more sprawling metros, buyers are flocking to less expensive downtown cores, bringing a renewed interest to these city centers."
Metro areas where home values in the urban core have traditionally been lower than those in the suburbs, such as Baltimore, Cleveland, Detroit and Indianapolis, are now seeing the value of downtown homes trending up. The average home that’s within a 10-minute commute of Detroit’s downtown area now costs $101,228 more than it did in 2019. Meanwhile, the price of living close to Indianapolis’ downtown area has grown $54,025 in the same time frame.
Analysts from Zillow and HERE said that while these trends seem to contradict each other, they’re both linked to the same thing – affordability. Americans want less expensive homes where possible and more flexible work opportunities mean many can now find them. So in homes where downtown has always been more expensive, people are able to find cheaper homes further out. And in metros with less expensive urban cores, those homes are now looking more attractive compared to the pricier suburbs.
Metros including Boston, Chicago, Dallas, New York and San Francisco are seeing downtown home values grow the slowest, with home prices even falling in some areas. For instance a home located within 10 minutes of New York’s downtown costs $73,673 less than it did in 2019. A home with the same commute time in Boston costs $21.175 less than it did two years ago. Those two metros are both geographically diverse and have homes of wildly different price points, but in both cases it’s true that homes are generally more expensive near downtown than those further out.
For more information check out this interactive map showing how home values have evolved in the 35 metro areas covered in the analysis, from 2009 to 2021:
