Remote work impacts the real estate market in several interesting ways but not, perhaps, in some of the ways that we might have expected.
Remote employment is becoming the rule rather than the exception in many businesses, especially as new virus variations circulate around the country. Many people are questioning if the rise in remote work impacts real estate prices. In addition, they want to know what the implications are for real estate investors.
#1 How Remote Work Impacts the Cost of a New Home
The real estate market is undoubtedly being influenced by remote work.
On the one hand, it raises demand for homes with distinct workspaces. More than a third of U.S. households are working from home more frequently than before the pandemic, according to the Census Bureau.
Multiple at-home offices are in higher demand than ever before to accommodate two or more persons working from home.
KB House, a leading homebuilder, has created a home office concept in select regions that are tailored to the demands of homeowners who work from home.
The dedicated home office area is altering home construction. In addition, it is raising the cost of new construction and enhancing the value of existing homes.
#2 How Remote Work Affects Residential Property Investments
The price and value of properties based on location are also shifting as a result of remote work.
The popularity of remote work is causing many who previously felt compelled to reside near pricey downtowns to “untether.” People who work remotely can reside further away from their places of employment. As a result, property values in urban areas may slow while rising in suburban areas.
Twitter, Square, and Coinbase are just a few San Francisco-based companies that allow workers to work remotely on a regular basis. This may be good news for consumers looking for more affordable homes in expensive areas.
However, real estate investors, both traditional and crowdfunding, may experience a reduction in demand. This is true, especially for residential real estate in areas that are typically more profitable.
We all know that California is awash in jaw-droppingly expensive real estate. However, we’ve already seen a major slowdown in rising property prices. Experts predict that the economy would continue to slow. This is particularly true in high-cost locations as a result of remote employment.
It’s true that more reasonable pricing in California may assist potential homeowners. However, a drop in the value of specific housing markets in the Golden State is bad news for investors.
#3 Commercial Real Estate Is Affected by Remote Work As Well
Aside from the impact on residential real estate, the shift brought about by remote employment is wreaking havoc on certain commercial markets. There is less demand for business spaces now that people can work from home.
California lost more people to migration in 2021 than any other state, according to research data. In addition, Pennsylvania, New York, and Massachusetts, the three most important states in the Northeast, were among the top ten losers in migration trends.
Individuals wanting to invest in real estate should keep an eye on migration trends.
This can provide a serious challenge to major cities like New York and Chicago’s real estate markets. It can perhaps result in price declines and more vacancies.
Unfortunately, these spillover effects are wreaking havoc on retail and restaurant venues. They are experiencing a surge in vacancies as more workers opt to stay at home rather than purchase in urban areas.
As a result of these improvements, suburban regions are likely to continue to grow. People no longer need to go to work in cities — or at least not as frequently.
As a result, demand for homes in suburbia is increasing, which has a favorable impact on the overall price of properties in suburban areas.
#4. Remote Work Impacts Suburban Prices
According to a recent study, suburban listing prices have risen at a quicker rate than city prices. In addition, a typical suburban home is on the market for nine days less now than it was in September last year.
Furthermore, it is selling faster than an urban property. As a result, it appears that remote work impacts the real estate market by producing a greater increase in suburban property prices than in metropolitan areas.
Perhaps the most intriguing aspect of these changes is that they affect a far broader range of locales than is generally seen when the housing market swings.
In addition, the rise of remote work has an undeniable impact on rural housing markets. According to reports from around the world, the advent of remote work is causing more people to depart cities in search of peaceful, rural places.
This can result in higher housing values in places with sparser residents and infrastructure.
Further, this raises another issue. Rural areas must have stable internet connections in order to connect to the home office. Otherwise, they won’t be able to benefit from the surge in remote labor.
Finally, it’s worth noting that remote working has had a significant impact on rent pricing, but not in the way you might expect.
According to one study, rent rise was slower in places with better education. These places had more people who were likely to work remotely than in other locations.
Another effect of the freedom to work practically anywhere is a reluctance to pay higher rents. This, too, has slowed the annual increase.
The influence of remote working on the real estate market is undeniable. However, like with many things coming out of the pandemic, the effect is inconsistent and frequently unpredictable.