Remote work is a trend and a growing fixture in the job industry. But, how has it impacted other industries like the housing market? Is there even a correlation between remote workers and the housing market?
Remote Workers and the Housing Market: How It All Began
Remote work is nothing new, but it was not mainstream in the United States. The concept of working from home became commonplace when the COVID-19 pandemic hit. Before that, it was conventional for employees to commute to their offices to work.
When the COVID-19 pandemic happened, many companies were forced to halt operations temporarily or have their employees work from home. Remote work was the compromise that allowed companies to function while simultaneously mitigating the risk of infection, but this changed the workplace a lot.
While the pandemic still looms, it is not as debilitating as before. Many countries have dropped their mask and social distancing mandates. And while some companies have issued back-to-office orders, others continue to practice remote work. At the very least, some companies use a hybrid setup where workers only have to show up to work a few times a week physically.
The Relationship Between Remote Workers and the Housing Market
Remote work has had a clear impact on the housing market. Many sought to move to cities with less stringent restrictions during the pandemic. While the COVID-19 outbreak has slowed, remote work continues to be common, causing a shift in the housing market.
More People Are Moving to the Suburbs
Buyers and renters choose to move away from large cities and economic hubs. With a work-from-home setup, workers have realized that they can work from anywhere with an Internet connection. This means they are no longer tied down to a place where they can easily commute to the office.
Suburbs and cultural hubs, in particular, are experiencing a growth in new residents. These places are more attractive because they offer a higher quality of life and a much lower living cost. While they have always been that way, remote work has redefined how people look for homes. Their search scope has expanded to include areas further away from the office.
The housing market remains hot, but this heat has spread to different places. It is not concentrated in large cities and densely populated areas anymore. Workers can work from out of state, no longer waiting until retirement to move to their dream location. Families can move to cities with lower tax rates and live closer to good schools without worrying about the long commute to the office.
Office Spaces in Residential Setups
According to the U.S. Census Bureau, between 2019 and 2021, the number of people engaged in remote work tripled. And while it took a pandemic for the world to realize the merits of working from home, remote work will likely continue to be a mainstay in the job sector.
With that in mind, buyers are more inclined to look for homes with a dedicated home office. It could be a spare bedroom, a basement, or even a sizable corner. Whatever it is, buyers are now searching for something that will allow them to separate their work life from their home life — even if it’s just in the form of four walls and a door. For multifamily dwellings, a co-working space may be a good amenity that builders will consider incorporating in future developments.
A Reduction in Office Buildings
Remote work has impacted not only residential real estate but also commercial real estate, particularly office buildings. Companies are choosing to downsize in terms of office spaces as work becomes either fully remote or hybrid. Businesses can save thousands of dollars in rent each month because there is no longer a need for a space big enough to accommodate all employees. Even hybrid offices can choose rolling schedules where workers don’t have to come in simultaneously.
This will also affect long-term commercial real estate. Developers will opt to build smaller office spaces, and the typical office space could even be reduced by half. Additionally, companies can move to less urban areas to save on rent. With remote work, a location outside city limits won’t be much of a problem.
Housing Market Stability Post-Pandemic
It is no secret that home prices surged during the pandemic. In fact, according to a study, 60% of the surge in housing prices can be attributed to the large-scale shift to remote work. Between November 2019 and November 2021, home prices in the United States leaped by 24%.
Remote work also created the impression of a housing shortage during the pandemic. Many people were looking to buy homes at the time. This resulted in the illusion that there was a massive demand for housing that the then-current supply could not meet.
But, in truth, it was not a housing shortage at all. The increase in demand was likely due to the rise in remote work. Plus, mortgage rates reached record lows at the peak of the pandemic. While demand remains high today, rising interest rates are poised to slow down the market. And, as 2023 rolls in, experts believe that the perceived housing shortage will adjust and correct itself soon enough.
The Final Word
As you can see, there is a clear relationship between remote workers and the housing market. Remote work experienced a boom during the pandemic. And while things are starting to go back to normal, work-from-home setups have carved themselves a permanent spot in the job industry. This will likely affect the housing market even further, though it remains to be seen to what extent.
Cedar Management Group offers HOA management services to homeowners associations and condominiums. Call us today at (877) 252-3327 or contact us online to learn more about what we do!
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