How Working From Home Is Changing Housing Markets

We are approaching a year and a half of the COVID pandemic in America and with so many people still working from home the desires and priorities of many homeowners have changed drastically.  Regular readers know I have some magic algorithms that monitor the internet in a constant search for cool mapping tools that help us learn new things about our changing world.

I recently discovered some new analysis with maps from online retailer Zillow about the rapidly changing housing markets across America.  Let’s dive in!

 

Changing Housing Markets

As vaccines rolled out and COVID rates started to drop in 2021 many employers started demanding their employees come back in the office, while others continued to allow liberal telework.  Still others took the middle road and adopted a hybrid strategy where employees might do a few days a week in the office and a few from home. 

These changes had a big impact on where people are choosing to buy houses, especially in and around urban areas.  Zillow recently issued a report titled The Great Reshuffling Is Changing How Far Americans Are Willing to Commute using their own data and analysis from HERE Technologies analyzing housing price changes in and around 35 urban centers in America. 

To me the key passage in the report that gives you the “in a nutshell” takeaway is this: 

Connecting home values to commute time data from HERE Technologies, Zillow found that there were two seemingly separate events happening across different types of markets. In more-expensive metros, proximity to the downtown center is being traded in for longer commute times and in less-expensive metros, shorter commutes to city cores are gaining value.

So in expensive cities like Washington D.C., Boston, and New York folks are choosing to buy in the suburbs or exurbs, perhaps relying on a current work from home arrangement or the hope of permanent work from home. 

If you go to the mapping interface in the report you can choose your city from the pull down menu in the upper left and see a map that allows you to compare the median home value by commute time. 

After choosing a city, simply hover your mouse over the map and a menu will pop up showing the commuting distance from the downtown core of that point, the median home value in 2021 of that area, and the 2-year percent change in home value. (note: it might not work as well on a cell phone)

Here’s what Washington D.C. looks like:

 

 

All Cities Are Not Created Equal

Above I showed the map of Washington D.C., the city where I now reside near.  But as longtime readers know I was born and bred in barely survived Baltimore, a city only 55 miles from D.C. but that couldn’t be more different.  If you choose Baltimore, the exact opposite is happening. 

 

As they say in the report:

But in less-pricey markets including Baltimore, Cleveland, Detroit and Indianapolis, homes with 20-minute commute distance to downtown grew in value the most. In many cases, these markets are more sprawling and decentralized, and the home values in the core are typically lower than in the suburbs.

What they fail to mention, for Baltimore at least, is the reason homes are so cheap in the city is because your chances of being assaulted or murdered are pretty substantial.  And large parts of the city are an urban wasteland. 

I’m glad to hear that homes close to the center are rising in value slightly more than those in the suburbs, but I hope the folks buying those homes know what they’re getting into.

 

Data Data Data…

The Zillow report also has two cool interactive Tableau charts to analyze the data in other ways.  One is a scatter graph showing the patterns discussed in the report.  

 

The other uses a simple bar chart format to show the data year by year in a different way.  Sorry to bore you with all of this but I know I’m not the only data dork out there 🙂 

As we all know, overall the U.S. housing market is on fire.  Supply is low and bidding wars are common.  J.D. Roth at Get Rich Slowly recently detailed his adventure in trying to buy a house and despite offering $128,000 over the asking price he still lost out. 

Interest rates are insanely low, and the stock market continues to give COVID the proverbial middle finger on it’s upward march.  These factors, along with a new work from home revolution, are creating some interesting patterns in housing markets across the country. 

According to Zillow affordability is now the main driver of housing preferences, not commuting time.

 

Geoarbitrage

So there you have it financial warriors, another cool mapping tool to help make sense of the rapidly changing housing markets in urban areas across America.  If real estate is part of your plan to get to financial independence, it would be wise to stay attuned of the rapidly changing market climate and resources like this are priceless.  

I post lots of tools like this that show various aspects of money and finance from a location perspective.  

Also be sure to check out my Geoarbitrage Resources Page that has tons of great tools to help you find your perfect location.

I hope you find these resources handy and I will continue to expose valuable tools that can help when deciding on a geoarbitrage strategy.