With the transition to working from home during COVID, many employees no longer wish to work at an office. As businesses begin to adjust to these changes in expectations, many are opening their doors (figuratively speaking) to policies that allow for remote work from almost anywhere in the country. This has been reported as a great benefit for employees, with many stating it’s one of the most important factors when choosing a job. That said, it has caused at least one big downside: increased housing prices, especially in less typical areas.
The National Bureau of economic research released a paper that attributed almost half of the rapidly rising home costs during COVID-19 to WFH. This paper suggested that as much as 15.8% of increased housing costs are caused by workers that only work from home. The evolution of WFH jobs, as well as their increased prominence, can continue to have a big impact on home prices throughout the country.
These home prices have been increasing the most in less typical housing markets, driven by WFH employees no longer confined to the area immediately surrounding their office. From Phoenix to Boise smaller, weather-favorable metropolitan areas have seen housing prices skyrocket. Lower population densities allowed WFH workers with pay more typical for higher income areas to move easily, outbidding local buyers. As they continue to flock to warmer areas, cities like Phoenix are continuing to feel the squeeze.
This isn’t just causing home prices to skyrocket – it can also be associated with the increased rental prices that have been spotted across the nation. If you live in a warmer, less-dense area you might have already seen the impact of rising costs near you. As WFH policies continue to evolve, it’s safe to say that we can expect housing prices to remain in limbo as the Federal Reserve increases interest rates to try and slow purchasing. Where do you think the market will go from here?
