While many of us would like to forget it ever happened, the pandemic has changed many aspects of our lives, including how and where we work. For some people, working remotely or in a hybrid mode has opened up new possibilities for finding affordable housing in different regions or with longer commutes. But how widespread is this trend and what are its implications for the housing market?
In this article, we will explore the findings of a recent study by Fannie Mae, the largest provider of mortgage financing in the US, that analyzed how remote and hybrid work has affected housing preferences and choices among more than 3,000 mortgage holders, owners, and renters between January and March 2023.
The rise of remote and hybrid work
According to the study, remote and hybrid work has remained remarkably stable since 2021, despite the challenges posed by the Omicron variant of Covid-19 and the attempts by some employers to bring workers back to the office. While the share of workers going to a work site or office every day was unchanged at 49% in both 2021 and in 2023, the share of people working fully remote ticked up to 14% this year from 13% in 2021. The share of hybrid workers, who work both remotely and on-site, also increased slightly to 37% from 36%.
The study also found that remote and hybrid workers were more likely to be younger, more educated, higher income, and living in urban areas than on-site workers. They also tended to have higher housing costs and lower housing satisfaction than on-site workers.
The impact of remote and hybrid work on housing decisions
One of the main findings of the study was that remote and hybrid work has enabled some people to move toward housing affordability by relocating to different regions or increasing their commute. The study found that 22% of remote and hybrid workers said they would be willing to do so at the beginning of 2023, compared to only 14% in the third quarter of 2021. This suggests that remote and hybrid work has given some people more flexibility and options in choosing where to live.
The study also revealed that affordability was the most important factor in finding a place to live for both renters and homeowners, followed by safety, neighborhood quality, and space. Remote and hybrid workers were more likely than on-site workers to prioritize affordability and space over other factors.
Implications for the general housing market
Remote and hybrid work has had a significant impact on the housing market by reducing the demand for housing in expensive urban areas and increasing the demand for housing in less expensive suburban and rural areas. This could help ease some of the pressure on housing prices, which have reached record highs in recent years due to low supply and high demand.
However, the study also warned that remote and hybrid work could create new challenges for the housing market in terms of infrastructure, services, and amenities in areas that are experiencing an influx of new residents. It also noted that remote and hybrid work could change over time depending on the evolution of the pandemic, the preferences of workers and employers, and the availability of technology.
Therefore, the study recommended that policymakers, lenders, developers, and consumers monitor the trends and effects of remote and hybrid work on the housing market closely and adapt accordingly.
The future of work is likely hybrid
So, will the American workforce be fleeing to remote forest cabins? Probably not any time soon. While remote work has proven its advantages, it also has clear limitations and drawbacks. Some workers may face challenges such as isolation, communication difficulties, distractions, or lack of adequate equipment or space at home. Some employers may have concerns about security, collaboration, innovation, or culture. Obviously, many jobs require physical presence, interpersonal interaction, or specialized machinery that can never be replicated at home.
The most likely scenario for the future of remote work is a hybrid model that combines the best of both worlds: working from home and working from the office. A hybrid model would allow workers to have more flexibility and autonomy over their schedules and locations, while also providing opportunities for socialization, teamwork, and learning at the office.
A survey by Forbes found that 97% of employees prefer a hybrid model of remote work in 2021. A report by Microsoft also predicted that we are entering a new era of hybrid work, where employees will have the choice to work from anywhere they are most productive. According to the report, 73% of employees want flexible remote work options to continue after the pandemic, while 67% want more in-person collaboration.
How will hybrid work impact urban real estate?
According to some experts, remote working from home could have a significant impact on the value of commercial and residential properties in major urban centers. A report by McKinsey Global Institute estimated that remote work could wipe $800 billion from the value of office buildings in nine “superstar” cities by 2030, as office attendance stabilizes at 30% below pre-Covid norms and rents decline . The same report also suggested that suburban house prices and rents could rise as more workers seek larger and cheaper living spaces away from the city .
However, not all analysts agree that remote work will lead to a permanent exodus from urban areas. Some argue that cities will remain attractive for workers who value social and cultural amenities, networking opportunities, and access to public services. Moreover, remote work could also enable more workers to live in areas where housing is plentiful and easier to build, which could increase the supply of affordable housing and reduce price pressures in the long run .
- What’s The Future Of Remote Work In 2023? – Forbes
- The future of remote work: An analysis of 2,000 tasks, 800 jobs, and 9 countries | McKinsey
- Working from home is here to stay – The World Economic Forum
- This Is the Future Of Remote Work In 2021 – Forbes
- Working Remotely in 2023? Here’s What the Future Looks Like – Emeritus