Working from home, commuting time, and intracity house‐price gradients

Abstract

AbstractThe popularity of working from home (WFH) in the US has surged over the past two decades, with the COVID‐19 pandemic further accelerating this trend. We hypothesize that WFH not only reduces the frequency of physical commutes but also lowers the time cost of commutes due to decreased urban congestion levels; both factors would flatten house‐price gradients. Analyzing big data from Google Maps on travel time in California, we first confirm that COVID‐19, as a WFH‐boosting shock, induced larger decreases in morning travel time in cities with a higher WFH potential. We then empirically validate the effect of WFH on house‐price gradients, channeled through its impact on commuting time; this effect explains 20% of the total WFH‐induced flattening of house‐price gradients during the pandemic in California.