Years from now, when economists look back at the various impacts of the coronavirus pandemic, it may turn out that the most consequential shift will be the expansion of work-from-home policies and the way they change how we organize our lives.
One of the most obvious fallouts of remote work is that commercial office space has taken a big hit during the pandemic. Between new waves of COVID-19 variants, shifting local restrictions and uncertainty about the implications and effectiveness of vaccine mandates, many businesses have taken an indefinite work-from-home approach to their operations.
In the short-run, these policies would not have been expected to have too significant of an effect in areas external to the workplace. But as time went on and companies began embracing either full- or part-time remote arrangements, employees with the most freedom saw opportunities to invest and change their lifestyles.
A report from Realtor.com this month underscored the effect that work-from-home policies are having on certain U.S. housing markets, where U.S. workers have had a noticeable influence on real estate:
They’re flocking to midtier cities nationwide, leading to a surge in home and rental price in these areas. For example, in Boise, Idaho — one locale seeing a jump in remote workers’ relocating — saw its median home price surge 41% compared to a year earlier. The median sold home price is $469,100 there.
Home prices rose by more than 35% compared to a year ago in the second quarter in pockets across the country, such as the Gulf shores of Florida to Idaho’s Treasure Valley and Massachusetts’ Berkshire County, according to National Association of REALTORS®’ data. All three of these locales have a higher-than-average share of out-of-state views of their real estate listings.
Even in rural parts of the U.S. — from Vermont to smaller towns in California, like Truckee — there has been an influx of new residents and the higher home prices that come with their arrival, Forbes reported earlier this year.
More than 18 months into the pandemic, it’s easy to understand why many workers have made the calculation that their flexible, remote arrangements are secure for the long-haul, and that they can plan their lives elsewhere accordingly.
Even for businesses, work-from-home and remote policies have become more of a perk they can offer to certain categories of prospective employees. They’re a way to attract talent from more distant locations and to retain people who might otherwise seek ample opportunities that enable to them to work remotely.
What this means outside the job market, however, is that already competitive housing markets are becoming inflated by outsiders who are leaving expensive urban areas for appealing and comparatively affordable locales. Untethered by the office, these workers are creating housing pressures where they might not have otherwise existed.
Susan Wachter, professor of real estate at the Wharton School at the University of Pennsylvania, recently told Barron’s that these trends may be positive for some cities and towns.
“Ghost towns of the past now have a future again,” Wachter said.
For the time being, these towns may just be overvalued by a rush on their properties. In vacation destinations, above-market sales may be perceived by buyers as investments that give them options in case their work situations change. With mortgage rates so low, they may be willing to spend more in these markets knowing that they’d likely be paying at least as much — and probably more — in the places they decided to leave with their newfound freedom.
Many companies seem to have sworn off setting hard dates for employees to return to the office, having grown tired of the shifting COVID-19 landscape around them, The New York Times reported this month, though a handful of large employers, including Uber, have pegged early next year as their target.
Eventually, it will happen more broadly. Employees will return to some form of office work, whether hybrid or full-time, and companies will make their determinations about how to structure flexibility more permanently into their culture.
The key is that for a significant portion of the U.S. economy, remote work is certain to be a part of the future and will create new interests and pressures in housing markets around the country. Whether or not some so-called “ghost towns” feel they want or need this future will likely be discovered on a case-by-case basis in the years ahead.
Photo Credit: Ken Tomita/Pexels.com.