How autonomous vehicles will impact the real estate industry

Since the arrival of the Model-T Ford back in 1908, cars have been changing where and how we live and even the design of our homes. With the widespread arrival of autonomous vehicles—also known as self-driving cars—on the near horizon, however, there are strong indications that the real estate industry is about to undergo another massive shift thanks to the automotive industry. What’s in store could include shifts that change where we live, where we play, and even how long we’re able to stay in our own homes as we age.  

The historic impact of cars on real estate

As cars became increasingly accessible, it was increasingly possible to work in the city but live somewhere else. This not only led to the spread of suburbs but also to a new type of home. By the 1950s, many people were living in homes where the driveway and garage were among its most prominent features. Indeed, as car culture grew, commonplace home features, like front porches started to disappear. After all, if you always enter and exit your house through the garage, who needs a front porch?  

If the 1950s to 1980s were a time when many Americans were happy to live in homes that appeared to revolve around cars, by the 1990s, car culture was in decline. On the one hand, oil reserves were in rapid decline and cars were increasingly being blamed for a growing host of environmental problems. On the other hand, urban planners and activists were engaged in a massive effort to revitalize the inner core of America’s cities, which included pouring renewed resources into public transportation and by the early 2000s, urban bike-share programs. These combined factors resulted in a mass reverse migration and at least some of those former suburbanites even stopped being car owners altogether. For real estate developers, the move back into urban centers has evidently seen a huge boom, resulting in a massive spike in land values in once decimated urban real estate markets and a growing demand for high-rise developments.

Over the coming two decades, it seems likely that another major shift is about to take place and at least some observers think it might result in a migration back to the suburbs and even into previously underdeveloped regions.

Location will matter less

It’s no secret that location has long been one of the greatest factors determining real estate. Whether it is easy access to the nearest freeway or subway station, values have generally been directly impacted by location and more specifically, the types of transportation options the location makes easily accessible. As autonomous vehicles become increasingly popular, however, some researchers and industry insiders are predicting that real estate may be especially impacted. David Silver, the head of the Self-Driving Car Nanodegree Program at Udacity, recently told Bloomberg News, “Real estate might be the industry that is most transformed by autonomous vehicles. It could change real estate from a business that is all about location, location, location.” This is because autonomous vehicles are expected to make our commutes to work easier, less stressful, less expensive, and significantly shorter. But if we’re no longer renting and buying based on access to transportation, what might happen next?

The suburbs will feel less isolated

One prediction is that as our commutes get a lot easier and shorter, paying significantly more to live in a smaller space in an urban center will lose much of its current appeal. While there will always be a certain number of people who are downtowners and not going anywhere, there is no question that at least some current urbanites would move out to the ‘burbs if it wasn’t for the commute. How much time do suburbanites currently spend behind the wheel? According to one recent study, 19 million Americans spend 2.5 hours per day behind the wheel and another 78 million American workers spend at least 1 hour per day behind the wheel. What if those times could not only be cut in half but also be reclaimed for other types of activities?

In New York City, truncated and stress-free commutes in autonomous vehicles seem bound to have an especially profound impact. While half a million doesn’t buy much at all in New York City and certainly not a condo or co-op large enough for a family of four, half a million would give a buyer considerable options if they moved out to a seaside community in Long Island or into Connecticut. Best of all, in addition to the much better values on homes, for commuters, commuting could become a time to enjoy a coffee, meditate, catch up on work, or make early-morning or day-end calls to clients.

The recreational property market will grow

Along with a potential move to the suburbs, there is no question that recreational properties, even those in more remote areas will become increasingly popular. If you theoretically could hop in your car at the end of the work week, fall asleep and wake up at your cottage early the next morning, distance would no longer pose the sorts of obstacles it currently poses. On this account, there are speculations that not only will buying a recreational property become increasingly popular as autonomous vehicles gain ground but also change where weekend homes are located.

Parking lots, parking garages and street parking will be repurposed

Especially in urban areas, parking is an ongoing issue. In New York City, for example, in its 2017 Mobility Space Report, Moovel Lab estimated that parking apparently currently covers an area equivalent to two Central Parks. Since autonomous vehicles are expected to be relatively expensive, there are speculations that owning a car will go into decline. At least in cities, this likely means that the need for most car garages, car lots, and street parking will be radically reduced as autonomous vehicles take over. In turn, this opens up the potential to both repurpose spaces that are currently being used to house cars and even rethink street space. Among other possibilities is the possibility of widening sidewalks and even closing more downtown pedestrian-heavy streets to car traffic permanently or at certain times of the day.

The need for senior housing will decline

One of the most fascinating potential impacts of autonomous vehicles on housing may be the impact it has on seniors and their housing. While there are many reasons that seniors eventually end up in retirement homes, in rural areas and the suburbs, losing a driver’s license is frequently the tipping point. While older drivers aren’t necessarily more likely to have accidents than very young drivers, declining vision and hearing and slowed reaction times due to chronic conditions like arthritis often force older drivers to give up their driving privileges. In car-dependent regions, this can mean moving in with family or moving into a retirement home. As autonomous vehicles enable the elderly to drive even after they no longer are fit to do so themselves, there are strong indications that many older Americans, even those living in rural areas, will be able to stay in their homes longer. This will theoretically reduce the need for senior housing and many of the costs associated with such housing.

Whether the future finds us lounging in parks that were once parking lots or living out at the lake full-time as commuting times shrink, there is little doubt that when autonomous vehicles finally become widespread, the real estate industry will be disrupted by this new automotive technology.

Lead image courtesy of Tesla Motors