Thursday, April 4, 2013

Moving Forward: A Personal Note and the Housing Implications of Telecommuting

by Jeffrey Lubell, Center for Housing Policy

A personal note

After seven years of service as the executive director of the Center for Housing Policy, I will be making a transition later this year to Abt Associates, where I will become the director of housing initiatives. I will start half-time at Abt on June 1, while continuing to manage the Center for a period of time while a replacement director is sought. While at Abt, I will continue to work on informing housing policy through research, while also exploring opportunities for cross-fertilization between Abt’s research and technical assistance practices.

I will miss the opportunities that the Center’s work provides to explore the intersection of research, policy, and advocacy. But with a talented and dedicated staff at the Center and NHC and the strong leadership of Chris Estes at NHC, I am confident that the transition will be a smooth one and the Center will continue to produce excellent, policy-relevant research.

As many of you know, I live in Vermont, while the Center/NHC offices are in Washington, DC, which means I have a rather extreme commute. Among other benefits of my new position will be the opportunity to work from home full-time, allowing me to spend more time with my family and less time on an airplane. While I will still have a fair amount of travel, it will not come on top of my regular commute to D.C., cutting down on my carbon emissions and improving my quality of life.

The housing implications of telecommuting

One person does not a trend make. But I have long thought that the potential implications of telecommuting for affordable housing are worth more attention. If telecommuting were to gain greater acceptance within the workplace, and if more people were to take advantage of the flexibility of telecommuting to relocate to areas with lower housing costs, it could potentially play an important role in addressing the nation’s affordable housing challenges. At the same time, it could promote economic development in satellite cities within large metropolitan areas as well as in smaller metro areas and well-located rural communities.

I should stress that these are very big “ifs,” and the available data do not yet support the conclusion that telecommuters will necessarily choose to move out of cities or large metro areas. But given the magnitude of our affordable housing challenges, it is worth considering every possible angle.

The potential for future impact

Let’s start by considering the potential for impact. What would happen if significant numbers of telecommuters started moving out of expensive communities into satellite cities within larger metropolitan areas or to smaller metro areas or central nodes within rural communities (such as college towns or county seats)? It’s hard to say with certainty since a lot depends on who moves, where they move, how many move, etc. But here are some initial thoughts on the potential impacts:

  1. The relocating households (likely, mostly professionals working in the knowledge economy) would gain access to housing that is substantially less expensive than what they had been used to. Some would choose to reduce their overall housing expenditures. Others would choose to increase the size or quality of their housing. Many would choose some combination.
  2. The increased demand for housing in the receiving community could lead either to the renovation of older homes (think of smaller, older cities) or the development of new homes (think of satellite cities within larger metro areas or college towns). There could be inflationary pressures in some areas, but presumably it would be easier for the market to respond with new supply to the increased demand in these smaller communities than in many high-cost areas that are already built-out.
  3. The receiving communities could experience some economic growth as a result of the influx of households that could benefit the community.
  4. The sending communities would experience a reduction in demand for housing that could potentially slow the rate of growth in housing costs.

The reality of today’s limited impact

Now obviously, this all depends on telecommuting gaining greater acceptance in the workplace—an elusive goal that has seemed to be just around the corner for many years, but remains a long way off. There are many ways to measure telecommuting, which lead to strikingly different conclusions about the proportion of the workforce that engage in it. But however you measure it, the trend does seem to be up, even if the overall share of the workforce that telecommutes full-time remains low.

According to one source, the number of employed individuals that identify home as their primary place of work increased by 73 percent from 2005 to 2011, rising to 3.1 million, or 2.5 percent of the workforce. By comparison, the overall workforce grew by 4.3 percent. These statistics exclude self-employed individuals working from home. Since self-employment has declined over this period, including self-employment within the statistics would show a slower rate of growth over this period of about 26% (still, a much faster rate of growth than for the overall employment base).

A second issue is whether telecommuters are really likely to move to different communities in search of more affordable housing. While there is reason to think that individuals take their telecommuting status into consideration in deciding where to live, an analysis of 1997 Current Population Survey data by Ingrid Gould Ellen and Katherine Hempstead found that telecommuters were actually more likely than others to live in large urban areas. Telecommuters do seem to live further from their place of work than non-telecommuters. But it’s still unclear exactly how telecommuting influences a household’s choice of housing or neighborhood.

Reasons to keep our eye on telecommuting and its impact on housing

Despite the slow take-up rate of telecommuting and its uncertain impact on locational decisions, I believe it would be a mistake to ignore the issue. With technology changing rapidly, the data and software infrastructure to support telecommuting is finally coming into place. If you've ever used business-class telepresence, you know how realistic it seems. Imagine if everyone had access to a similarly high-quality video connection at a low cost in their own home. It’s only a matter of time before we’ll be able to have face-to-face conversations fluidly and inexpensively across long distances. What will the implications be for settlement patterns and the affordability of housing?

A second reason to keep our eye on the trend is the likelihood that housing costs will continue to rise over the long-term in many high-cost metro areas. For the most part, it has proven difficult to produce enough supply in these areas to keep pace with demand. Places that have been able to produce enough supply tend to build further and further away from places of employment, leading to higher transportation costs and increases in traffic congestion, energy use and greenhouse gas emissions. Telecommuting offers a way to reduce the combined costs of housing and transportation as well as the negative impacts on the environment and quality of life of long car trips.

Finally, from the perspective of smaller communities—such as college towns or shrinking cities—even the influx of a relatively small number of households could have an outsized impact on local economic development.

Looking forward

As we make the transition to a more connected world, it will be interesting to see whether smaller cities and towns try to capitalize on the opportunity to market themselves to highly mobile professionals. Perhaps they’ll set up shared office centers where groups of telecommuters can work remotely, coming together for office functions, sharing telepresence facilities (at least until they are ubiquitous), sharing a copier, receptionist, etc. Perhaps they’ll use technology to bring in cultural events, much like the Metropolitan Opera shares its live performances. And maybe they’ll even set up advertising campaigns to market themselves to potential new residents who are currently living in large cities -- perhaps focusing on young families getting ready to send their children to school, who may be able to bring their jobs with them.

It’s too early to know whether this trend will have a substantial impact in the near term, but it’s worth being open to the possibility that technology may have a major impact on the housing field, as it has in other areas. To the extent it facilitates telecommuting, it could promote economic development in satellite cities, smaller cities, college towns and other well-situated communities, while playing a small but important role in addressing the nation’s affordable housing challenges.

We’ll look forward to your input on the ideas in this column. Please join the conversation and post a comment below. 


The Fifty Co-Op USA said...

Any feedback on resources related to this topic whether they be research reports, books etc...?


The Fifty Co-Op

Lydia Agro said...

Thanks for the thoughtful/insightful column! In addition to lowering both housing and transportation costs through telecommuting, there is also potential for lowered child-care costs under such a scenario. Areas which have lowered housing costs may also have lowered childcare costs. In addition, less commmuting time and more flexibility over one's work hours = less time needed for childcare coverage/more time to parent one's children and therefore a lower cost/better quality of life. There’s been some amount of recent public discourse regarding telecommuting and child-care issues but the intersection between affordable housing (for low and middle income families), transportation costs and time saved, and affordable but good child-care could potentially all be factors that would play into where one chooses to live if one were able to telecommute.

Carolyn R. said...

An idea that came from high school students in the Model Atlanta Regional Commission last year was 'Satellite' corporate offices solely for 'telecommuters'. It would be a building spaces in outer suburbs, with telecommunications equipment, for teleworkers to 'telework' from this space, allowing one to work closer to home or as a place to come 'into the office' one or two days a week to work with other teleworkers for greater interaction with co-workers, idea sharing, networking, face-to-face meetings. Teleworkers could still go to the downtown or other location 'headquarters' once a week, or several times a month for major meetings, and other purposes. I thought it was a brilliant idea and one whose time has come - these are young adults ready to use the technology skills they embrace for different type of work environment than the older generation has envisioned.