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A continued explosion in the popularity of working from home is directly responsible for a 15.1 per cent of the increase in the average house prices.
Analysis found that home work – which became normal for tens of millions during the pandemic – was responsible for the majority of the 23.8 per cent increase in house prices between December 2019 and November 2021.
The shift to working remotely during the pandemic is partly responsible for driving house prices in the United States higher as people sought out larger and nicer properties to work from.
Statistics provided from the National Bureau of Economic Research (NBER) found that by the end of the period, 42.8% of employees in the US were still working from home part or full time.
Many chose to buy a larger property to make home work more comfortable, the analysis found, pushing up demand and prices.
Others moved to a new city altogether, with some cities seeing property prices explode by a quarter.
‘House price growth over the pandemic reflected a change in fundamentals rather than a speculative bubble,’ researchers wrote.
But the rise in remote work is making the already pricey housing market even more expensive.
House prices in the ‘Sun Belt’ attracted remote workers looking for a warmer climate.
Prices in Austin, Texas had grown by 26% from the year before, according to the National Association of Realtors. Prices in Phoenix were also up by 26% and in Boise, Idaho, by 24.3%.
House prices in Austin, Texas (pictured) had grown by 26% from the year before
Prices in Phoenix, Arizona (pictured), went up by 26%
Johannes Wieland, an associate professor of economics at the University of California, San Diego, and co-author of the study, noted that cities like Austin, Boise, Phoenix and San Diego saw some of the biggest home prices increases in the country.
‘Where more people are working remotely, that’s where the home prices grow,’ said Wieland.
Wieland said these cities cities share three main features, including a predominant industry – like tech jobs – that allows for remote work, a lower population density, where there is more space and more affordable housing.
‘It is hard to work at home in New York City, for example,’ he said, as he explained that having extra space for an office comes at a premium. ‘Lower-density areas are more attractive for remote work.’
Prices in Boise, Idaho (pictured), went up by 24.3%
A third feature the cities share is the warmer climate and often an appealing lifestyle.
‘There is more remote work where the weather is nice,’ he said. ‘When you’re not tied to a location because of your job, you can choose where you want to be. Many of these places…are attractive to people who can move to a place for lifestyle and not for work.’
Wieland added that the evolution of remote work is likely to have a large impact on the future path of home prices and inflation.
‘We were pretty shocked remote work had this impact, once we saw the estimates,’ Wieland said. ‘We thought about how people moving to different locations would be important. And it is. But it is the people who are remaining in a metro area — the people who need more space at home if they work at home — that is really pushing up prices. That is the majority of the story.’
The study’s findings support what economists at Zillow have been tracking through the pandemic in what they call the ‘Great Reshuffling,’ CNN Business reported.
‘We’ve seen what we called the ‘Great Reshuffling’ that has contributed to the demand for housing nationwide,’ said Chris Glynn, senior managing economist at Zillow.
‘It has accelerated trends that existed before the pandemic. Migration to places like Austin [Texas] and Raleigh [North Carolina] has been happening for a while, but the pandemic accelerated it because of the un-tethering between an office and home that has allowed people to make choices about where they want to live.’
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