- Rising real estate prices are influencing where people are choosing to live and work.
- In June 2021, home prices across the U.S. surged 24.8% year-over-year.
- As more workplaces join the remote working train, more cities and states are offering incentives for remote workers to relocate.
It’s clear that rising real estate prices are influencing where people are choosing to live and work.
Particularly in the United States, the real estate market is on fire.
But a lot of people can’t afford apartments in many cities, much less buy a home.
In June 2021, home prices across the U.S. surged 24.8% year-over-year — to a median sale price of $386,888, according to Redfin.
Pandemic-related market disruptions like increased demand and rising building costs, as well as other long-term supply constraints in the housing market contributed to record increases in prices.
Some workers that took advantage of cheaper rents during the pandemic to move to more favorable locations have discovered that now their leases are skyrocketing, forcing them to find somewhere cheaper to live.
“The most ambitious landlords are attempting to raise rents by as much as 80%,” a broker at Warburg Realty told the Wall Street Journal.
Rents were up an average of 11.5%, compared to last August, according to data from Zillow.
Employees who previously lived and worked in city centers have been willing to move further away to the outskirts of cities or nearby suburbs to find cheaper prices.
Many people cannot afford to live and work in big cities anymore
Cities with the steepest rent hikes include Salt Lake City, Boise, and Phoenix, according to Zumper.
This economic trend has encouraged remote workers to move into less urban areas, although most workers who must physically go into their workplaces have not had the ability to choose where to live and work.
Just before the start of pandemic lockdowns, 10% or less of the U.S. labor force worked remotely full-time. Within a month, around half of American workers worked remotely. Today, most of them still are.
As much as a quarter of the 160-million-strong U.S. labor force is expected to stay fully remote in the long term, and many more are likely to work remotely for a significant part of the time.
But where are they living?
Everyone has to live somewhere, so where are workers moving to when housing is so expensive in the present climate?
Where and why are American workers moving?
In addition to supply factors, there have also been pandemic-related demand factors stemming from increased at-home work and heightened mobility.
At the start of the pandemic, there were elevated levels of migration away from city centers and into suburbs and other less population-dense areas, which created a higher than usual churn in the housing market.
In addition to this, mortgage rates (which have declined to all-time lows over the past year) are making borrowing more affordable, which has contributed to stronger demand for new homes even though house prices are increasing.
According to Zillow, more than one in ten Americans have moved in the past year.
Historically, people have had to move closer to cities because that’s where jobs are. Now, as a result of the pandemic, a lot of workers have been untethered from their offices and are moving into the suburbs and out of high density populated areas.
Data from northAmerican® Van Lines found that some of the country’s largest and most expensive housing markets saw the highest net outbound moves, including New York, Los Angeles, San Francisco, and Chicago. Zillow saw for sale inventory in these metropolitan areas climb, while inventory nationally hit new lows.
“More affordable, medium-sized metro areas across the Sun Belt saw significantly more people coming than going, especially from more expensive, larger cities farther north and on the coasts. The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere,” said Zillow senior economist Jeff Tucker.
Digital marketing agency Higher Visibility analyzed cities across the U.S. for the most ideal places for people to work. Factors included affordable housing, rent prices, and cost of living.
Here are the top ten most affordable places for workers to live in America:
- St. Petersburg, Florida
- Las Vegas, Nevada
- Miami, Florida
- Indianapolis, Indiana
- Columbus, Ohio
- Jacksonville, Florida
- Memphis, Tennessee
- Louisville, Kentucky
- Tulsa, Oklahoma
- Anchorage, Alaska
Employers can help their workers find a place to live
As more workplaces join the remote working train, more cities and states are offering incentives for remote workers to relocate. The localities hope that newcomers, especially well-paid ones, can help boost their economies in the post-pandemic era.
Workers can benefit because the incentives can be hefty. For example, moving to West Virginia could come with $12,000 in relocation grants alone.
It remains to be seen whether these new trends will become permanent or whether workers will return to their offices in the cities post-pandemic.