Home Prices Are Soaring in Areas Without Mass Transit

In an age of remote work, home buyers are increasingly moving away from cities.

There was a time when city homes were in high demand. For many people, buying in a city meant having a shorter commute to work, not to mention getting to take advantage of nearby amenities like restaurants, cafes, and entertainment.

But these days, home buyers seem to be flocking to suburbs and rural areas. The reason? They're far more affordable. And with remote work having grown so popular, it's an option that's finally on the table.

Home prices are rising outside of large metros

Before the pandemic began, remote work was a benefit many employees didn't have. But for the past 16 months, a large number of workers have been doing their jobs from home, and now that it's safer to start bringing people back to the office, some companies recognize that may not be necessary.

After all, if companies uphold remote work policies, they get to save money on office space. And if they allow employees to do their jobs remotely, they can widen their respective talent pools rather than limit themselves to job applicants within a few specific zip codes.

It's this uptick in remote work -- or, more specifically, in permanent remote work -- that's likely fueling the trend of rising home prices in areas that are vehicle-dependent and don't offer mass transit. In fact, Redfin reports that home prices in car-dependent areas have risen twice as fast as those in areas with ample public transportation.

The median home sale price in vehicle-dependent areas has, on a national level, risen 32.8% to a record $418,100 since January 2020. For areas that aren't car-dependent, the median home sale price has risen 15.6% to $540,500 during that same time frame.

However, homes in metro areas with public transit are still far more expensive -- hence the higher median price. But as far as growth goes, it's clear that suburban and rural homes are in higher demand.

One thing worth noting is that in some cases, the cost of public transit can be far less expensive than the cost of owning, maintaining, and insuring a car. As such, those who move to areas with extensive public transportation systems can often afford to take on a higher mortgage, since they're not paying to keep a vehicle on hand.

But either way, it's clear that in an age of remote work, buyers are willing to ditch larger cities and plant roots in smaller towns, where they can generally get a lot more square footage for their money. Does this mean that home values in cities will start to come down? Not necessarily -- so that's not something city buyers should get their hopes up about.

Right now, home prices are astronomically high on a national level, and until more housing inventory hits the real estate market, they're likely to stay that way. Still, it is interesting to note that home price growth has been highest in areas that are car-dependent, and it'll be interesting to see if that trend continues as nightlife opens back up in cities and more prospective buyers are lured in.