For Seattle residents, 15 minutes and 40 minutes in the rush hour traffic could mean the difference between owning a home that costs over $900,000 and one that costs approximately $600,000. According to an analysis by Zillow, homes in Seattle with peak commute times of less than 20 minutes cost 40 percent more per square foot than those that are a 20-40 minute commute.
The analysis found that buyers of typical Seattle-area homes should expect to pay a premium of 7.5 percent to live in a home that was five minutes closer to downtown during rush hour. When converted to actual values, this could mean paying up to $35,000 more on a home costing $468,000—the median value of homes in Seattle.
“Put another way, a typical Seattle house might sell for $962,000 if it came with a 15-minute rush-hour commute, but only $632,000 with a 40-minute commute,” Zillow said in its analysis.
It’s not only the price that people trade-off to live closer to work. According to the analysis, near the city center, where a car commute was under 20 minutes during peak hours, the median single-family home was about a third smaller than the median for the metropolitan area as a whole, coming in at around 1,260 square feet compared to 1,830 square feet in the larger metropolitan area.
For those who use the public transit system too, a lesser commute time meant paying more dollars towards buying a home. Homes, mostly condos, with a transit commute of under 20 minutes were typically priced at around $690 per square foot, around 40 percent more than homes, mostly single-family units, with transit commutes between 20 and 40 minutes.
While renters got a better deal than homeowners, the analysis found the story wasn’t very different when you compared apples to apples. The analysis found that while five-minute decreases in car and transit commute times were associated with 3 percent and 1.3 percent rise in rents for otherwise similar apartments as homeowners. However, rents per square foot were about 34 percent higher for units with the shortest commutes, relative to those with longer ones.
For the analysis, Zillow, along with Here Technologies, estimated peak commute times to Seattle’s downtown from every home in the metro area and then matched that data with its own database on individual home sizes, home values, or rents. It then grouped these homes into bands by commute time (for car and transit commutes) and characterized the typical home in each band. Finally, Zillow estimated a model to compute counterfactuals i.e. how much would these homes cost if they came with a shorter commute.