Flexible work = Flexible living
WFH is changing the nature of work—and the future of the housing market
The growing shift towards remote work has the potential to change the future of the US housing market, opening up homeownership to millions of priced-out renters as well as driving a boom in the purchase of second homes. To understand what this means for homebuyers, we dig into the outlook on remote work, what opportunities it could create, and how it’s already changing the housing market.
For many firms, remote work could be here to stay
While the transition to remote work was challenging at the start, many companies report that it could become a permanent part of their operations moving forward.
The Wall Street Journal reports that tech companies like Facebook, Twitter, and Square have already announced that they will allow select employees to work remotely full time, and expect nearly 50% of their workforce to work remotely within five to 10 years. Columbus, OH-based insurance giant Nationwide has announced a permanent transition to working from home for some of its employees, as well as offering a hybrid work model for others.
Hello WFH, and goodbye daily commute
Once we all got over the whole ‘working from the kitchen table’ thing, WFH as a new norm appears to growing on folks. According to surveys conducted by the business publishing company getAbstract, 43% of full-time American employees report wanting to work remotely more often even after the pandemic subsides, and nearly 20% said their employer is actively discussing how to make remote work an option in the future.
By taking the daily commute out of the equation, remote work saves employees both time (goodbye two-hours on the train!) as well as money—money they could be applying towards a home of their own.
An opportunity for priced-out renters
Buoyed by the freedom to work remotely, millions of renters who are currently being priced out of their current market could become homeowners—in a locale of their choosing. According to Jeff Tucker, economist at Zillow, “If remote work becomes a bona fide long-term option especially with the pandemic, that could reshape the U.S. housing market by opening up homeownership to people renting in expensive parts of the country.”
Tucker estimates a shift to remote work would give up to 2 million renters in the US the option to leave their current metropolitan area and purchase a starter home in a cheaper city.
A potential boom to new markets
To understand the squeeze of expensive markets, and the opportunity a change in scenery could provide, just look at San Francisco. According to Zillow’s research, 22% of renters in San Francisco are priced out of starter homes in their area but would be able to afford monthly payments on the typical starter home in the U.S., at $725. That same monthly starter home in San Francisco would be at least seven times higher, at $5,181.
Opportunistic renters could decide to opt for a change of scenery and relocate to more affordable cities like Pittsburgh, Minneapolis, Phoenix or Denver. The opportunity to buy in a new market could be especially beneficial to millennials, who represent nearly half of the 1.92 million renter households who could afford homeownership.
A second boom…for second homes
The last six months have also led to surging demand for second homes, as well as a flight out of cities and into more rural housing markets. Pending home sales in Bend, Oregon rose 150% year-over-year in July, California’s Sierra Tahoe MLS reached its highest residential dollar volume in history and was up 200% year-over-year, while New York and New Jersey denizens have doubled home sales in Rehoboth Beach, Delaware compared to the same time last year.
Traditionally, owners of a second home might max out their stay at three days (Friday to Sunday, with longer stretches during the summer or holiday) but the changing realities of work and school are shifting use patterns for second home users, leading new owners to stay for weeks and months and a time. As a result, qualities like high-speed internet, home offices, and learning areas for children have become highly prized among prospective new home buyers.
Homebuyers with school-age children are particularly interested in putting down secondary home roots in a locale no more than four-hour drive away from their current residence.
To learn more about opportunities that might be available to you or to talk through your financing options, feel free to reach out to your local Guaranteed Rate loan officer at any time.