Today’s Buyers Value Proximity Over Luxury
Despite the continued preference for work from home, millennial and Gen Z buyers prize walkable locations near services and an easy commute more than size.
When it comes to housing choices among the youngest homebuyers, size doesn’t matter – or at least it matters less than location. The National Association of REALTORS (NAR) 2023 Community & Transportation Preferences Survey , found that 90% of Gen Z and millennial buyers would pay more for a home in a walkable community and one-third said they would “pay a lot more” for walkability.
“Overall, the demand for dwellings in a walkable community has been trending higher at least since 2015 when it was 45% to the 2023 survey which reached the highest level yet at 53%,” says Hugh Morris, manager of smart growth for NAR. “Our survey also found that people who report that they live in a community where they can walk to places also report feeling a higher quality of life.”
The majority of respondents of all ages to the NAR survey said they prefer a community where they can walk to shops and restaurants and have a shorter commute, even if that meant they must live in a townhouse or condo or have a smaller yard. The preference among the majority was for a home with a small yard over one with a larger yard that was farther away from amenities.
A recent Green Builder Media COGNITION Smart Data survey found that most millennials prefer to live in vibrant city, followed by a location on the outskirts of a city. Gen Z respondents expressed a preference for a suburb near a city, most likely because of affordability, followed by living in the heart of a vibrant city.
Hot Zips and Proximity to Services
Suburban neighborhoods near Boston, New York, Chicago, Detroit and St. Louis were high on Realtor.com’s annual Hottest Zip Codes report , which found renewed interest in homes within commuting distance of offices in major cities.
The hottest zip codes, which refer to locations with the most views by prospective buyers and the places where homes sell the fastest, include a mix of more affordable neighborhoods compared to the rest of the country and those that are less expensive than the nearby metro area.
“This year's hottest zip codes suggest that buyers are looking to capitalize on both proximity to large business hubs as well as suburban living amenities,” says Hannah Jones, senior economic research analyst for Realtor.com. “We see evidence of less budget-constrained buyers choosing areas that are city-adjacent but offer slower-paced living and less congestion than the city's core.”
This represents a shift compared to buyer preferences at the height of the pandemic, Jones says, when buyers valued access to nature and having more space for working and living in their homes.
“It seems today's buyers are looking to carry over some aspects of the home-centric pandemic lifestyle, while also complying with in-office requirements,” Jones says. “For example, homebuyers in this year's third hottest zip code, 07450 in Ridgewood, New Jersey, may not see much of a price advantage relative to nearby New York City, but the move across the Hudson offers more space in an idyllic, historic village with upscale amenities and great schools, just a commute away from Manhattan.”
In NAR’s survey, 84% of respondents said it was very or somewhat important to have sidewalks and places to take a walk, and 79% said it was very or somewhat important to live within an easy walk of community amenities. In addition, 55% said it was very or somewhat important to have bike lanes and paths nearby. Living within a short commute to work was very or somewhat important to 72% of respondents, while having public transit nearby was very or somewhat important to 65% of respondents.
Commute Times Still Matter
Early in the pandemic as workers who could work from home left offices vacant, commuting distance was a lower priority for homebuyers. Even those who worked in the office occasionally found their commute easier because there were fewer cars on the road. Now, some companies are mandating more frequent office appearances.
“Return to office and hybrid work arrangements seemed to be front of mind for buyers in the first half of the year,” Jones says. “After a couple years of buyer demand spreading into smaller towns, half of this year's hottest zip codes were within commuting distance of major cities.”
Most of this year's ten hottest zips are within an hour commute, either by car or train, of a large economic hub, Jones says.
“Buyers who adhere to a hybrid work schedule are likely willing to take on a slightly longer commute if it means more space for less money,” she says. “Buyers appear to value proximity to job opportunities as well as value and access to amenities. For example, buyers in the 6th hottest zip code, 46322 in Highland, Indiana, are just a 45-minute commute from central Chicago and saw median listing prices almost 25% lower than the Chicago median in June.”
While commuting distance affects the environmental and financial cost to get to work, it’s also a time issue. Work-life balance is extremely important to millennials and to the Gen Z generation.
In a 2022 survey , just 14% of millennials said work should come first, making them the generation that cares the most about work-life balance, followed by Gen X at 16% and Gen Z at 19%. That represents a sea change compared to 2009, when 41% of millennials agreed that work should come first even if it came at the expense of more free time.
Affordability Impacted by Transportation Options
Of course, living in a walkable community with an easy commute typically comes at a higher cost than homes in a more distant location. Buying a smaller energy-efficient home can offset some of the operating costs of homeownership. So, too, can buying a home where you don’t need a car at all or where you can use your car less often.
“Right now, supply and demand are way out of balance, so all housing seems expensive,” Morris says. “Walkable communities, almost by definition, have more multifamily buildings where the units are likely smaller than in a single-family home, but young buyers may have incomes that make renting or buying a place in a walkable community financially challenging. However, if one can forego car ownership, which is expensive, then the monthly payment may not seem as burdensome.”
The average cost to own a new car topped more than $12,000 per year in 2023 ($12,182), according to AAA’s Annual Your Driving Costs report . That includes financing, fuel, insurance and maintenance.
“Many people have discovered that it’s possible to live without a car, that owning a car is expensive and that it can be a time suck,” Morris says. “Why own one when car sharing might work on the occasions when one needs a car?”
However, Morris acknowledges that living car-free living can be challenging in many locations.
“For that to work, the community needs to be constructed using smart growth principles such as higher density and mixed-use development,” Morris says. “The city needs to provide the infrastructure for alternative ways of moving around such as walking and biking, with sidewalks, safe street crossings, bike lanes and a transit system robust enough to make it a viable alternative to the car.”
Among Realtor.com’s Hottest Zip codes, demand is high in Northeast locations near public transportation as well as in affordable areas in the Midwest where commuting by car is more practical, Jones says.
Whether they can walk, bike, ride an electric scooter, take a bus or a subway, proximity is prime for younger buyers.
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