Journal Article

Hybrid Working, Commuting Time, and the Coming Long-Term Boom in Home Construction

Abstract: The long commuting times from outer suburbs to the central business districts of large metropolitan areas have depressed single-family home construction over the last two decades. The shift to hybrid working during the COVID-19 pandemic, however, has reduced the time many people spend commuting and potentially increased their willingness to live farther from employers. Lightly settled land at the peripheries of metropolitan areas may become more desirable for development, relaxing a long-standing constraint on single-family home construction. In this article, Jordan Rappaport estimates the statistical relationship between single-family home construction and commute duration, finding a significant negative correlation across the largest U.S. metropolitan areas. Across metropolitan areas with a population of at least 1 million in 2020, the time employees save commuting from outer suburbs to central business districts by working remotely two days a week ranges from 130 to 406 hours per year. These results suggest that in the long run, the time savings from fewer commutes could almost double single-family home construction in these metropolitan areas from its level just prior to the pandemic, an aggregate increase of 427,000 units per year. The largest metropolitan areas are likely to see an especially strong boost.

Keywords: housing; metropolitan areas; pandemic; commuting;

JEL Classification: R31; O18; J81;

https://doi.org/10.18651/ER/v107n4Rappaport

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 2022-09-29

Volume: 107

Issue: no.4