According to research conducted for the Federal Reserve Bank of San Francisco, the shift to remote work was highly responsible for the huge jump in home prices during the COVID-19 pandemic.
Fed researchers noted that US home prices rose 24% from November 2019 to November 2021 – a period in which 60% of workers were working from home as COVID-19 spread.
More than 60% of the increase in home prices during that period was due to the remote working trend, the study concluded. The researchers noted that remote workers “were able to relocate to cities with cheaper housing or more attractive facilities”
Economists Augustus Kemetz and John Mondragon of the San Francisco Fed and John Mondragon of the University of California, San Diego said, “Our results suggest that the rise in home prices due to the pandemic reflects a change in fundamentals rather than a speculative bubble. “
“This implies that the development of remote work may be an important determinant of future housing costs and inflation,” he said.
bloomberg was the first to report on the research.
The researchers arrived at their result by adjusting the data for migration to cities that were “more attractive” to remote workers.
“Nevertheless, after adjusting for the role of migration, our estimates suggest that 1 percentage point more remote work leads to an increase in home prices by about 0.9 percent, which is lower than initial estimates but still much larger.” ,” They said.
Home prices hit record highs during the pandemic-era housing boom, when workers were no longer tied to housing within walking distance of their jobs. But the market has since cooled off when rising mortgage rates have eroded affordability and put many buyers on edge.
Meanwhile, the office-to-office push in many companies has prompted many workers to return to cities, leading to increased rent costs that have contributed to decades of high inflation.
house prices are Many markets began to decline, especially those considered to be “overheated” by pandemic-era demand.
as the post pointed out Earlier on Monday, home-purchase contract cancellations hit new highs last month as leverage moved back toward buyers – with the highest rates found in the Sun Belt “boomtown”.