Mounting evidence

Two interesting articles have come to my attention, both pointing to the growing importance of telecommuting. The first, on-line from National Public Radio, analyzes the locational distribution of homes suffering from the sub-prime housing crisis. Titled: Home Prices Drop Most in Areas with Long Commute, the article notes that much of the drop in real estate prices comes from those who face large bills for fuel. Specifically:

Economists say home prices are nowhere near hitting bottom. But even in regions that have taken a beating, some neighborhoods remain practically unscathed. And a pattern is emerging as to which neighborhoods those are.

The ones with short commutes are faring better than places with long drives into the city. Some analysts see a pause in what has long been inexorable — urban sprawl.

The second article, also on-line but a blog from Tech Republic, discusses the four main trends observed at Interop (a large high tech trade show) by Executive Editor Jason Hiner. Trend 3 of the 4 is Supporting a decentralized workforce. Here’s a key quote:

At Interop, one vendor told me that 70% of all employees now work outside of the corporate headquarters. Another vendor told me that number is actually up to 80%. One representative of a very large IT company said that it recently moved into a new headquarters and that the employee-to-workstation ratio is now 4-to-1 (up from 1.5-to-1). That’s because they now have a lot more mobile employees and they actively encourage employees to work from home during times they don’t need to come into the office.

Admittedly, the attendees at Interop come from the infotech-intensive part of the economy but it is clear that the growth of acceptance of telecommuting continues. What can we infer from these two articles?

First the good news: the lower real estate prices in areas more distant from central cities have been particularly attractive for young families buying their first homes; homes that would be unaffordable in the central cities. The bad news is that those economics depended on low fuel costs since most of those new homeowners had jobs in the cities. Now high fuel prices have added to the financial stress on many of those long-commute residents. The result? Housing deflation.

One of my continuing worries has been that telecommuting would act to exacerbate urban sprawl simply because it lessens the fuel cost penalty of establishing a residence far from work. As a result of that worry, we tracked changes in residence locations of telecommuters versus non-telecommuters and found no significant difference. (You can read those results in a paper in our publications page.) The average household move of telecommuters tended to be slightly nearer to the office. But that was a decade ago; there may be a difference now. Could telecommuting be part of the solution—a way to revitalize those distant, declining communities by lowering the fuel cost penalty? If there were more telecommuters in those outlying areas perhaps there might be less strain on those real estate markets.

Although the factors that brought about the sub-prime crisis are much more complex than that, the growing number of telecommuters might help to ease the strain somewhat if their moves to the distressed areas act to stabilize home prices as the telecommuters snap up foreclosed properties.

2 thoughts on “Mounting evidence”

  1. There is another option beside moving back to the city to fight the high cost of gas. Office workers can telecommute from Remote Office Centers. A Remote Office Center provides office facilities and internet to workers from different companies in shared centers located in the suburbs. There is a free web site for people who want to find a remote office near where they live.

    With the price of fuel as high as it is, people are going to have to move closer to work or move the office closer to home. Sometimes, moving is not an option or it is too expensive an option. Remote Office Centers are easy and make sense.

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