What will self-driving cars mean for D.C. property values?
There’s been quite a bit of talk around autonomous cars for a few years now. Google is working on them, as is Apple and Uber, among many other tech companies. According to 99mph, autonomous cars will have a major impact on real estate in the future.
Mayor Muriel Bowser announced an autonomous vehicle working group in D.C. on Feb. 12, to “proactively prepare the District for AV technologies and ensure that AV deployment will benefit District residents and visitors.” The group, which includes representatives from agencies on transportation, disability rights, environmental issues, and public safety the press release noted, will look at the implication of autonomous vehicles in the District.
Taking their own look at how autonomous vehicles will impact cities, 99mph considered 13 major cities and the anticipated financial impact autonomous cars will have on property values in those areas.
“We conservatively estimate that ~$1 trillion of residential property value is going to shift across 13 major US cities due to autonomous vehicles,” 99mph wrote. Of that $1 trillion worth of property value, Washington, D.C. is expected to represent $88 billion. D.C. will see the fourth greatest shift, after San Francisco ($167 billion), New York ($189 billion), and Los Angeles ($277 billion).
These shifts will happen for a number of reasons. “This value will shift from properties with a convenience premium reflected in their current price (e.g. near public transit, short commute) to properties that currently have an inconvenience penalty baked into their price (e.g. long commute, far from city center),” 99mph wrote.
The biggest thing is this: Autonomous vehicles will make commutes more enjoyable, 99mph explained. Rather than being stuck behind the wheel, paying attention to the bumper-to-bumper traffic for an hour each way, riders can sit back and watch TV, catch up on the news, answer emails, or make phone calls.
One other perk could be improved traffic flow. While 99mph admits that this theory brings in strong opinions on both sides, it’s still worth considering. If autonomous vehicles are able to communicate, then roadways will be able to accomodate more cars per lane and an increased average speed of those vehicles. Then again, if autonomous commutes are really as wonderful as some think, then demand for those options would increase, causing a counteraction of traffic flow gaines, 99mph noted.
Public transport will change too. According to 99mph, driverless cars will be that much better than public transportation, it simply won’t keep up. “Public transit, which already struggles fiscally in most major cities and is starting to lose share to Uber, simply won’t be able to compete with the combination of convenience, comfort and price offered by efficient on-demand autonomous vehicle fleets,” 99mph explained.
So what changes should D.C. expect? 99mph first explores what makes a property more expensive. The biggest part of this is proximity to a city center. “In Washington D.C., a large amount of variance (61 percent) in property values can be explained by how close the property is to the city center.” Using a graph, 99mph showed how a home that is 40 minutes away from Downtown could benefit from autonomous cars. If that 40-minute commute starts to be as easily managed and enjoyed as a 35-minute commute, the value of that property could go up by $19,000 or more.
This example works well for D.C., which 99mph notes is a monocentric city, where most people commute to a single city-center.
So, D.C. folks should consider the implications. According to 99mph, homeowners may want to keep an eye on investments in home equity, since those values could shift if autonomous vehicles come to fruition.