How self-driving vehicles can fix the San Francisco housing crunch


In the San Francisco Bay Area, home prices have seen significant appreciation the last few years:

Source: Paragon Real Estate Group

Source: Paragon Real Estate Group

In the Bay Area, skyrocketing home prices and rents have driven people out of the area. They look for homes in further-out suburbs and exurbs, extending their commutes to work. And the Bay Area leads the nation in the percentage of people who are mega-commuters (pdf). If you’re raising a family, you accept that long commutes (e.g. hour or more) are the price you pay to have a home for your children.

It’s frankly worrying the way prices continue to rise and people are being pushed out further and further from the employment centers of the Bay Area. Similar types of scenarios are playing out in New York City, Washington D.C., Los Angeles, Chicago, etc. It causes a rising level of stress for working parents, trying to excel both at work and at raising their children.

The general response has been a call for the creation of more affordable housing. Which is a very desirable objective, and needs to be pursued. There is no other near-term relief.

But project yourself forward a few decades. A time when the roads will be dominated by self-driving vehicles. Many benefits to individuals and society will open up. One valuable outcome we will see is this:

————————————————————-

Commute time becomes regular work time

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Once you’re freed from having to drive, having to pay attention to the road, you’re afforded new options. Participate in conference calls. Respond to emails. Write documents. Prepare presentations. Run the numbers. Access files in the corporate drive. Engage in conversations. Read reports. Update project plans. Etcetera, etcetera, etc…

As Bay Area companies compete for workers, I expect that they will recognize the challenge of the housing market. Rather than continue to pay escalating salaries so people can afford to live in San Francisco, Santa Clara, Palo Alto, etc., companies will try a different approach. Hire people who live much further out.

See the map below, outlining Northern California median home prices:

Northern California regional home prices

Let’s take Roseville, CA as an example. Roseville is 106 miles away from San Francisco, with at least a two-hour commute. And look at the home price difference. You can buy a typical home in Roseville for nearly $700,000 less than what it costs in San Francisco. Per Chase Bank’s mortgage calculator, one can afford a house in Roseville with $100,000 in household income. In San Francisco, you need a household income of $266,400.

Look at that from a Bay Area employer’s perspective. You can spend a lot less on workers who live further out. Of course, that comes at a cost in terms of worker productivity. Or does it?

Let’s assume companies get wise to the benefits of hiring people who live far away from the office. You can imagine a worker’s daily schedule looking something like this.

Extreme commuters daily schedule

Such a schedule would provide for:

  • Productive work time during expected work hours
  • In-person face time at the office
  • Parenting time
  • More money in the employee’s bank account
  • Less money spent on compensation by employers

Self-driving cars are really the enabling technology for this schedule. We can look at the much discussed Google Buses for some insight. On Quora, Google employee Mary Xu says she uses the bus commute to Mountain View as productive work time. Which validates the possibilities here. However, in a discussion forum about Google Buses, user gnomatic notes that the shared resource of the bus does restrict worker productivity. Wifi can be overtaxed, and phone calls are considered bad etiquette. Which means that individual vehicles are better for realizing the worker productivity.

Self-driving vehicles will radically change the game for us in the decades ahead, a point made also by Reid Hoffman in a terrific post. I fully expect the nature of where we live and work to be altered by autonomous vehicles.

I’m @bhc3 on Twitter.

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About Hutch Carpenter
Chief Scientist Revolution Credit

3 Responses to How self-driving vehicles can fix the San Francisco housing crunch

  1. Sounds interesting but there a few aspects to consider, I think:
    – As more people will move to places like Roseville, house prices will rise there and probably drop in the Bay Area. It will take time, of course.
    – More people commuting from far away places means more traffic on highways and eventually more commuting time.
    – More miles mean cars will have to be replaced earlier. Also maintenance costs will rise.
    – Cars need gas. More miles = more gas = more money.

    Also, only time will tell if you can be as productive in a self-driving car as in the office or at home. Ecologically, it will be terrible if people are commuting such long distances alone in their cars. Ride sharing could bring down maintenance costs as well as costs for gas. It will ruin the productivity aspect, of course.

    Maybe my view is too European. 😉

    • Fair points Carsten for sure. Certainly prices would rise as demand picked up for faraway locations. But the intrinsic qualities of the Bay Area would still hold allure.

      Regarding increased traffic. Once cars are all connected, experts expect that traffic will actually be much better. No more fallacies of one’s own driving abilities. Cars will follow one another at quite close range, at a fairly high speed. Why? Because there’s little surprise in the driving. As conditions change, the vehicles rapidly adjust.

      Agree about gas and the environment. Long term, watch for electric vehicles to become the more dominant mode. Uber CEO Travis Kalanick recently said that if electric car maker Tesla could build a fully autonomous car by 2020, he’d purchase the entire production run.

      I admit the position I take here is bit “out there” (like Roseville). But it’s a logical path based on trends happening today.

      • Good point about self-driving cars being more connected. I have read an article about this aspect a couple of months ago but unfortunately forgot about it yesterday. I am old.

        Regarding electric vehicles. Yes, there will be more in the future and in the long run they will replace those running on gas. At least that is what I hope for (or even better, vehicles running on solar power). On the other hand, electricity has to be produced as well. But yes, it will probably be cheaper than gas.

        Thank you for a great article that made me think. 🙂

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