Housing prices—especially the price of single-family homes—in the Washington metro region have increased rapidly since COVID-related restrictions were first implemented in March of 2020. The House Price Index (data, methodology) compiled by Federal Housing Finance Agency, shows that single-family home prices (including the appraised values for both purchased and refinanced homes) in the Washington metropolitan area increased 12 percent between March 2020 and March 2021. Likewise, the price of “purchase only” single-family homes (meaning actual arms-length sales, and excluding those appraised for refinancing) was up 20 percent.
The Wall Street Journal reports that on the national level, of late, homebuyers are attributing less importance to commute length when purchasing a house. Researchers, using Zillow data, show that across high-cost markets like ours, “home values are appreciating faster in areas with longer commutes to the central business districts.” This is a reversal from a year ago, when homes closer to the central business districts were appreciating faster. This is offered as evidence that homebuyers in high-cost markets are “willing to trade longer commuters for lower prices,” perhaps with the expectation that they can continue to work remotely and would have to commute fewer days, or none at all.
To see if this observation holds for the Washington metropolitan area, we used Zillow data to map housing value increases across the metro area counties. We focused on single family homes, excluding condominiums and coops because multifamily housing units, which are more concentrated in the District of Columbia, have been negatively impacted by COVID-19.
Zillow data show that since March 2020, when COVID-related restrictions were first implemented, single-family home values appreciated faster in every county in the region compared to the prior year, but the rate of increase was especially high across outer counties. For example, during this period, single family home values appreciated by 8 percent in D.C., 7 percent in Alexandria, and 6 percent in Arlington. In contrast, values increased by nearly 20 percent in Prince William and Fauquier counties, 19 percent in Loudoun, and 18 percent in Montgomery and Prince George’s counties.
In comparison, during the one-year period from March 2019 to 2020, central locations such as Arlington, Alexandria and the District saw single-family homes appreciate at rates similar to or higher than the appreciation in the entire region. These two maps, side by side, indeed suggest that demand for housing in the region has been shifting towards areas with longer commutes and cheaper prices. It is important to note that commute is not the only consideration for homebuyers. There could be many factors behind this trend, such as people wanting to live in less dense areas post-pandemic or the desire for more space. But a longer-term shift to remove work or flexible work options would certainly reduce the importance of commute times.