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Remote work has undoubtedly altered the way we work and live. But one often overlooked impact of this work arrangement has been the rise in housing prices across the US.
In fact, these policies have contributed to half of the 23.8% growth in housing prices between 2019 and November 2021 according to a new paper released by the National Bureau of Economic Research (NBER).
The research comes from John Mondragon, an economist at the Federal Reserve Bank of San Francisco and Johannes Wieland, an associate professor from the Department of Economics at the University of California, San Diego.
“Our results imply a fundamentals-based explanation for the recent increases in housing costs over speculation or financial factors, and that the evolution of remote work is likely to have large effects on the future path of house prices and inflation,” the report read.
Those who thought that the pivot to remote work would help them in their goals of becoming homeowners quickly saw those dreams shattered as prices grew 15.6% year-over-year in April.
According to Redfine, the median price for homes reached $424,824 while the number of homes sold decreased by 13.2% from the year prior.
Just 30% of Americans think it is a good time to purchase a house at the moment according to a Gallup poll, the lowest level seen since the organization began surveying this question in 1978.
With more people working from home now than ever before, the desire to find a space that can accommodate both living and work-like environments is in high demand. However, rising costs make this unattainable for many young professionals.
More specifically, the NBER paper shows that remote work caused housing prices to increase by 15.1%. While a return to the office could alleviate these costs, the likelihood of remote work policies being completely reversed are slim to none.
“If remote work reverses, then there may be a general reversal in housing demand and potentially house prices,” the paper read. “If remote work persists, we may expect important repercussions as increased housing costs feed into inflation and so affect the response of monetary policy.”
