Longer commutes may mean lower home prices

The COVID-19 pandemic has changed how home buyers look at their real estate commute, and it’s a change that some of us didn’t expect.

FOX 5 real estate expert John Adams always says there are only three things that matter in real estate:  location, location, and location. And while that's still true, we are beginning to see a new trend due to the pandemic in metro Atlanta and around the country.

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.

The change reflects that commute length has declined in importance for home buyers, as many workers expect to travel to their offices less often going forward. At the same time, rapidly rising prices have made affordability a bigger concern for many buyers.

Adams says there are four things you need to know about this trend.

1.  Super low borrowing costs are boosting prices everywhere.

As interest rates have plummeted to remarkable lows, prices have skyrocketed in almost all areas.  As long as these rates last, we can assume that prices will reflect the lower cost of ownership, and the Federal Reserve has told us again and again that no significant rate increases are even on the horizon.

2.  One of the very few variables in the cost of real estate is the land.

Start at the Fox Theatre and draw concentric circles every 5 miles. As you go farther and farther out in all directions, the amount of land increases exponentially.  At about 12 miles, you have included all of Interstate 285 - that’s about 500 square miles.

But double that to 25 miles, and all of a sudden, we’re looking at almost 2,000 square miles. Prices for land drop significantly.  

Then double that to 50 miles, and land prices drop to very affordable levels. And we are now looking at more than 7,500 square miles and much more affordable prices. And we are still not in the Athens city limits

3. Short commute is no longer as important as it was.

Buyers in high-cost markets have been willing to trade longer commutes for lower prices.  As we move farther and farther from Buckhead to the far suburbs and then to the exurban areas, builders are able to find cheaper land. That translates into bigger lots, more privacy, and lower prices. It also means less crime, less traffic and less pollution.

4.  Buyers believe work from home is here to stay.

While there are many jobs that can only be performed in person, the pandemic has shown all of us how much can truly be accomplished when employees are allowed to work from home. This is a trend Adams believe is here to stay. Going forward, he predicts many workers may come into the office only occasionally, and even then, perhaps on a voluntary basis.

The bottom line is that while location is still the single most important factor when we think about real estate, now we have to add price and high-speed internet.

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