Length in commute drops in importance for new home buyers: RPT

New analysis from Zillow shows that length in commutes has dropped in importance to home buyers. Yahoo Finance’s Akiko Fujita and Zack Guzman discuss.

Video Transcript

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AKIKO FUJITA: New home buyers are increasingly prioritizing lower prices over longer commute times. That's at least according to new analysis out from Zillow. "The Wall Street Journal" is reporting that home prices in areas with longer morning commutes to business hubs actually rose faster than neighborhoods with shorter commutes.

And Zack, you're said interesting stat because they looked at in this journal story, the Boston metro area. And they found that in this two-year period that ended in May of this year, home values in neighborhoods with a 70-minute commute rose 30% as opposed to 9% in areas that were a little closer.

And I guess this kind of speaks to the new work environment too, because we've been hearing more and more companies that are using this hybrid environment to say you may not have to come in five days a week anymore. Maybe two days at home or three days at home and two days in the office. And that I would imagine changes the whole calculus of where you want to live.

ZACK GUZMAN: Oh, yeah, for sure. And, I mean, it's not just Boston. I mean, we've been seeing that play out over here in Texas in Austin for quite some time as kind of the home prices in those pretty far out neighborhoods. Some might have said too far just a year ago, but not the case anymore-- seen prices skyrocket there.

And, you know, you do wonder. I mean, obviously, it could be a short lived thing. We keep talking about maybe companies taking longer to get people back in the office than what the expectations were. We saw Apple announce a delay in getting employees back to the office.

But at some point, you can debate the new normal there versus what we saw pre-pandemic. But you do have the idea that maybe you're going to eventually have to get back into an office. And that commute, though, you might be doing it less, still going to be long.

So you do wonder how much longer some of these changes might hold when it comes to those farther out neighborhoods seeing these price gains. But it is something we have seen not just regionally, but pretty much across the board no matter what city you're looking at.

AKIKO FUJITA: Yeah, you're right. I mean, even if you don't have to go in five days a week, you just still-- you do have to commute in weekly at some point. So, you know, what that payoff is. I mean, that's something that home buyers clearly have to sort of determine what the priorities are. But it does sort of jive with the trends that we've seen in home buying, which is during the pandemic, we saw so many people move out of the cities, which I imagine would have a much longer commute time.

Zack, one of the things that struck me in this journal article, though-- they point out commute times. Average commute times to work in the US-- 27 minutes in 2019. That's up from 25. I mean, I don't know. Maybe we just live in areas where there's a lot of traffic. 27 minutes doesn't seem that significant to me if that really is the average. But maybe I'm looking at this all wrong.

ZACK GUZMAN: Yeah, I mean, you're talking to-- if you're looking at people in LA and San Francisco-- I know New York has always been maybe traditionally not the best of commutes. But it's always been one of those things that's tied to happiness, right?

The commute time is always a large variable and how happy you are. And I think that's probably why we've seen, you know, some people not want to go back to the office because of that, once that aspect completely disappeared from their lives. It's tough to add it back in as you lose time, especially if you're driving.

That is one thing that you flex over other cities out there. If you're able to ride the subway, you're able to get some work done on there. You don't have to worry about driving. Maybe that's also why people are so amped up about their self-driving Teslas when they get behind the wheel of those.

But, I mean, it is something that I think it's going to be something that we're watching closely here. If you're a realtor out there and you're trying to flex that for those outer cities, that is definitely something where you might fall on the other side of the camp and say, look, you're never going have to worry about commuting.

You could live out here in these far off far-flung neighborhoods. And you're going to try and stretch that for as long as you can and run with it. But it is interesting to see it all play out and how it's impacting things. We'll see how long that la--