When autonomous vehicles (AV) are discussed in the same breath as real estate, the topic generally revolves around things such as how demand for parking garages at larger mixed-use developments will drop if AVs become a primary mode of transportation. However, the effect on property values might be the real story.
According to 99mph, an organization that analyzes the disruptive arrival of driverless cars, driverless vehicles will lead to a shift in residential settling patterns in the same way that the invention of mass-produced vehicles led to the development of the suburbs. Currently, homes that offer shorter commutes or proximity to public transit are considered to have a “convenience premium” built into their prices while homes with longer commutes or that are further from transit carry an “inconvenience penalty”.
99mph concludes that AVs will lead to more pleasant and, potentially, shorter commutes, which will mean that homes further away from a city center will no longer carry as much of an “inconvenience penalty”. In other words, how bad is a 45-minute commute if you are reading a magazine rather than maneuvering through start-and-stop traffic?
“If someone’s painful 40 minute commute to downtown Washington, DC magically begins to feel like a 35 minute commute, a $376,000 home, the average for the DC [area] in our dataset, should be worth $19,000 more,” the post claims.
99mph believes that the DC area will see $88 billion in residential property values shift between zip codes with the arrival of AVs. This is roughly 8 percent of the total residential property value in the area. The study goes on to say that 61 percent of the variance in property values is linked to proximity to the city center because a large proportion of people commute downtown to work. DC is one of the “monocentric” cities where this pattern holds true; “polycentric” cities where people drive in varying directions to get to work see less of an impact on property values.
The country is still at least a couple of decades away from seeing driverless cars adopted on a large scale, but the expectation of their adoption may lead to property values shifting within the next decade.
As published by Urban Turf – Nena Perry-Brown – 2-1-18