On the future of Austin Real Estate
I’ve been thinking about how autonomous vehicles will change the residential real estate market in Austin.
We recently bought a house in Tarrytown with the primary reason being the short commute to downtown Austin. I can take local roads to work without hitting any congestion. A significant convenience premium was reflected in the price of the home since a majority of residents will agree on the value of a short commute in Austin. What happens when that disappears?
When Level 5 autonomous vehicles hit the streets in 10–20 years, it will make commuting a relaxing and perhaps productive activity. We won’t need to wait that long before conveniences will arrive though. Level 2 technology in cars today has already changed how people view commuting. It seems reasonable that at some point these technologies will significantly reduce the convenience premium (and inconvenience penalties) baked into Austin real estate prices. Not only will commutes be more enjoyable, overall commute times will likely go down when there is enough penetration of this technology in the cars on the road. This impact isn’t as far off as it may seem since the benefits will get priced into the real estate in anticipation of the fact. Areas like Tarrytown and West Lake, where convenience premiums are meaningful, may be reduced significantly in value over time. What areas will benefit?
My view is that people will gravitate towards two things depending on what they value — to be closer to the city center where everything is in walking distance or to move further out where they can enjoy more space. A second order effect of Level 5 autonomy may be a major reduction in parking lots downtown which could give way to much more density for residential real estate. In that scenario, it’s tough to say how downtown real estate prices would be impacted. I do think that neighborhoods that are currently a 45 minute commute or longer to downtown are likely to do better relative to other areas in time. And other positive qualities beyond convenience such as waterfront views will become more heavily weighted. Lake Travis, here we come!
Austin city planners may have to consider what it means to have more density downtown and more sprawl everywhere else.
And I may have to consider selling my house at a loss.
If you’re interested in the topic, here is the fantastic article that inspired my post.