How Autonomous Vehicles Might Impact the Housing Market
The housing market in the United States was built around the subdivision and the automobile. Until 2011, the rate of suburban population growth outpaced urban growth. People preferred the larger lots and open space of the suburbs to the densely populated urban areas, and the automobile allowed that to happen.
That model is about to change, perhaps drastically, with the development of the autonomous vehicle. In just a few years, autonomous vehicles have gone from science fiction to roaming the streets of cities across the country. Currently, 29 states have enacted autonomous vehicle regulations, and California is set to soon allow autonomous vehicles on the road without a human backup driver. The federal government has also updated its regulations on autonomous vehicles in order to encourage their development, and companies are pumping millions of dollars into the development of autonomous vehicles. Ford expects to have a fully autonomous vehicle without a steering wheel and pedals on the market by 2021. The goal is for the vehicle to be used by ride-sharing services.
“This will completely change us as a society,” said Shannon McDonald, an assistant professor at Southern Illinois University-Carbondale. “I think it’ll have the same transformational change as the introduction of the automobile.”
The transition from driver-controlled vehicle to autonomous vehicles is expected to have a huge impact on the real estate market. Since the end of World War II, development patterns and housing designs have been built around the automobile. A massive shift in the transportation infrastructure will drastically change land use and real estate development, altering the way people think about and buy a home.
While it is unclear exactly how and when the autonomous vehicles will impact the housing market, here are a few predictions:
The Need for Parking
The assumption among many experts is that autonomous vehicles will reduce car ownership. People will hail a ride-sharing autonomous vehicle and will not have the need to own their own vehicle, especially in urban areas. With fewer people owning their own cars, cities will have less need for the massive amount of parking spaces.
“America’s parking footprint, estimated at 500 million parking spaces, consumes more land than Delaware and Rhode Island combined,” Gensler said in a report on driverless cars.
Shopping malls, parking garages, and other structures could be abandoned, and that would create more space for residential development. Density could increase in the inner core of a city, but also subdivisions could be designed differently. The huge amount of space needed for vehicles could allow for more recreation space in a subdivision.
“Developers are recognizing that the urban landscape is going to change, and they have to design buildings, especially long-term builders, that they have to design buildings for the future,” said Andy Cohen, Gensler CEO.
Changes to the Public Transit System
Housing is built around public transit systems. People want to be able to easily commute to work from where they live. As a result, places like Boston, Chicago, Kansas City, and Austin have all seen transit-oriented developments around rail lines. Autonomous vehicles change that model. People can live anywhere if an autonomous vehicle is the preferred mode of transportation.
That might mean a decline in real estate values around public transit. A condo on a rail line might become less appealing to real estate buyers when all a person has to do is hail an autonomous vehicle to get to get to work. Living near a rail line no longer becomes an advantage.
Density in Major Markets Will Increase
Autonomous vehicles are expected to reduce vehicle ownership because people will not rely on their own personal vehicle. A reduction in car ownership will create space for more dense development in the heart of a city and open up opportunities for innovative housing models.
Outside the urban core, large sections of land will become unlocked, freeing up space for additional home construction. The elimination of auto dealerships, gas station and parking lots will reduce the strain on available land for housing, and thus likely reducing the cost of housing in the suburbs. The shift could also reduce home value appreciation in some areas.
“Developers will start using the promise of AV and driverless cars to realize net savings,” said Don Elliott, a zoning consultant and director at Clarion Associates in Denver. “It’s not necessarily cheaper, but more space can be used for commercial or residential purposes.”
Outlying Areas Will See Housing Boom
A longer commute will become more desirable with autonomous vehicles. For years, many homebuyers have followed the drive-until-you-qualify motto when looking for a house. People wanted to be as close as possible to the city to reduce commute times, but at the same time fit within their budget. The autonomous vehicle makes commuting less of a burden. The morning and evening commute can become productive because the machine is doing the driving. A person can use a laptop and accomplish work tasks while the computer drives the person to work.
That could mean a drastic change to the housing market. People will not necessarily want to live close to the urban core. They might be more inclined to live beyond the city in a more rural part of the region because they are not losing productive time while daily navigating commuter traffic.
Enable the Elderly to Stay in the Home Longer
People have historically transitioned to assisted living and nursing homes as they age. The autonomous vehicle makes aging-in-place easier. An elderly person can be driven to the store or other places by the autonomous vehicle once he or she is no longer able to drive. The individual does not have to rely on others and can remain independent for longer.
That could reduce the supply of houses coming on the market in the future and make it more difficult for younger people to find housing. The result could be an increase in housing prices, as demand outpaces supply.
“We believe the additional demand for homeownership from seniors aging in place will increase the relative price of owning versus renting, making renting more attractive to younger generations,””said Sam Khater, chief economist at Freddie Mac.
The Modern Garage Will Be Redefined and Repurposed
The two-car garage is indelibly linked to the modern American home. Most homes built over the last 50 years have an attached garage, but the autonomous vehicle means less demand for a garage. People will not own a vehicle, and thus they will not need space to store it.
Homebuilders are already working with architects and trying to imagine homes in a subdivision without a garage. How would it change the planning for the entire community? What would be built in the space where the garage currently occupies?
“Homes will have a smaller footprint in the next few decades,” said Dan Bridleman, senior vice president of technology and sustainability at KB Home. “But they can still be creative, dynamic spaces.”