Housing costs across the US have soared to near-astronomical levels in recent months — and the shift to Distance working The reason could be, according to new search From the Federal Reserve Bank of San Francisco.
The research, published on Monday, found that home prices rose 24% between November 2019 and November 2021. Increased demand for working from home accounted for more than 60% of the overall price hike and similar rent increases during that period.
Economists August Kemitz and John Mondragon, of the Federal Reserve Bank of San Francisco, and Johannes Welland, economist and assistant professor at the University of California, San Diego, note that workers who are able to work remotely “were able to move to cities with cheaper or more attractive housing. Rest” as offices have been closed to limit the spread of Covid-19.
These cities saw the largest rise in housing costs, while the “least likely” areas to work remotely saw the slowest growth in house prices. Some of the cities that have emerged as hotspots for remote work during the pandemic include Charleston, South Carolina; Orlando Florida; Wilmington, Delaware, according to LinkedIn.
The researchers compared regions across the United States that had similar volumes of immigration during the pandemic but different degrees of remote workers as well as regions that had different levels of immigration but similar degrees of remote workers to isolate the effect of remote work on housing demand separately On the impact of pandemic-stimulated migration.
For example: Remote work has increased in both the San Francisco Bay Area and Tampa, Florida during the pandemic, but the Bay Area has seen exodus While the people of Tampa exploded. However, Welland says home prices in both areas have become more expensive during the pandemic CNBC Make It.
This is because there is a similar demand among remote workers in both areas for a new home, Welland adds, as the option to work from home has allowed people to move away from the office and motivated them to buy larger homes to accommodate their new lifestyle.
Even after adjusting for this migration, most of the effect of telecommuting on home prices remains: each 1 percentage point increase in teleworking caused a 0.9 percentage point increase in home prices. The researchers also found that the increase in remote work had a “similar” effect on rental rateswhich reached record levels across the United States
“Our results suggest that rising housing prices at the expense of the pandemic reflects a change in fundamentals rather than a speculative bubble,” the authors wrote. “This means that the evolution of remote work may be an important determinant of housing costs and inflation in the future.”
Even with signs of housing market cooling, it’s still hot, thanks, in part, to housing shortages, persistent inflation and economic uncertainty. Earlier this week, the 30-year US average was steady Mortgage rate It reached 6.87%, the highest rate since 2002, and rental rates continue to rise In cities across the United States
Federal Reserve Chairman Jerome Powell Reporters Last week, he said the housing market needed a “hard correction” to make homes more accessible to more Americans.
“There was a huge imbalance,” Powell said. “House prices were rising at an unsustainable rapid level.” “In the long term, what we need is for supply and demand to align better so that home prices rise at a reasonable level and at a reasonable pace and people can buy homes again.”
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