A lot has happened in the past several years that has greatly impacted the housing market. For starters, a once in a generation pandemic forced the phrase “social distancing” to become an everyday household phrase. This led to many Americans seeking out more space in the home, resulting in a major shift from city life to suburban living throughout the country. In addition, various lockdowns and closures in the economy forced the government to respond with various programs to aid Americans during what essentially was a self-induced recession. As a result, interest rates remained at historically low levels allowing many Americans to take advantage of low borrowing costs. Ultimately, we have seen a largely unexpected bull market in housing with prices skyrocketing by the month. With all of this said, there is still one factor that has likely contributed the most to the strong housing market…
The work from home (WFH) evolution
The COVID-19 pandemic has impacted all aspects of life with one of the biggest impacts seen in the workplace. In an effort to promote social distancing during the pandemic, many employers have adopted a work from home model. Subsequently, this new remote work lifestyle has resulted in demand for larger homes with more comfortable workspaces.
Surging demand for bigger homes to accommodate the virtual workspace has fueled much of the rise in home buyer demand and thus corresponding prices. In fact, according to a working paper published by the National Bureau of Economic Research, the demand for additional virtual workspace may be responsible for more than half of the surge in real estate prices during the pandemic. Although we have written about this topic in several articles on this blog, this is one of the first papers that aims to quantify how remote work reshaped the housing market.
According to the findings from this analysis, remote work led to about 15 percentage points of the 24% average increase in house prices between December 2019 and November 2021. Needless to say, these findings are quite significant & will likely have lasting effects on the housing market.
Summary
In closing, we have found that regions of the country with the highest rates of remote work experienced much higher home price growth during the past several years. Perhaps there is no better example of home price growth due to the virtual workplace than right here in South Florida. With the advent of the virtual workplace, we have essentially removed all geographic barriers for working Americans. As a result, many have decided to move to our tropical paradise while taking advantage of other benefits such as a lack of a state income tax. Are you thinking about relocating to South Florida? Contact Natasha at Live South Florida Realty, Inc. today!
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
