The Impact of Decreased Car Ownership on Real Estate Markets
Ridesharing and carsharing services like Uber, Lyft, and Zipcar are already decreasing the need for car ownership, particularly for people living in crowded urban areas. Uber and Lyft are also simultaneously building an autonomous fleet of self-driving cars, further reducing the car requirement. Taken together, these trends will drastically change the face of transportation and commuting in a country currently heavily reliant on cars. If both ridesharing and driverless cars seriously undercut the once unquestioned obligation of car ownership, what impact will this lifestyle shift have on the real estate market?
Transportation historically triggers growth. Cities have grown up around major ports of call, with transportation extensions unfurling outwards from these hubs. People have organized their lives around access (to work, school, food, entertainment, nightlife, etc.), but time and convenience have borne the cost. So once the issue of access has been addressed in favor of time and convenience, what options open up for commuters?
The availability and affordability of ridesharing, combined with driverless cars, will likely lead to expanded urban sprawl. Workers will no longer need to invest in expensive urban real estate when they can simply move farther away. The accessibility of remote working technology can even monetize their commute. Rush hour is no longer a threat, since you can capitalize on the extra time in the car by working, communicating, organizing–even eating, sleeping, or exercising!
Ridesharing and driverless vehicles may eventually be preferable and economical in terms of comfort, efficiency and even the environment, compared to urban and regional public transit options. This Chicago Tribune editorial compares the outcome of driverless cars to the evolution of the smartphone, extending that analogy beyond providing a digital footprint to solving for in-person appearance.
Once commuters arrive at work, they surely will not miss the extra hassle of parking their car–it will either park itself or pick up another fare. This means parking lot space and restrictions will be drastically reduced, freeing up real estate–especially expensive urban real estate–and precipitating development. Businesses and apartment tenants will also be off the hook for financing parking levels in their buildings. Real estate development will, likewise, have less to worry about once building codes reflect minimized parking requirements.
Even homeowners will directly feel the effects, as ridesharing and self-driving cars free up garage space for storing, living, redecorating, and renting. TechCrunch predicts the self-storage industry could take a hit and Airbnb could see more business, as homeowners reclaim an estimated 15% of living space.
The revolution doesn’t stop at recovering precious time and square footage: former car owners will also save a tremendous amount once they eliminate insurance premiums, car repairs, and maintenance costs. This increased spending capacity will certainly influence other industries in unforeseen ways.
However, the revolution is still a decade or two in the future. The rate of urban versus rural transition will certainly vary, determined by infrastructure, regulation, and demand. And self-driving cars have a ways to go, to account for safety, economy, reliability, and availability. But when all the pieces align, the real estate market will inevitably be stimulated, and people may finally regain that most elusive commodity: time.