DENVER (KDVR) — If you’re upset about housing costs, you can chalk half of it up to remote workers, according to one study.
Directly or indirectly, COVID-19 pandemic policies ushered in the worst U.S. inflation in 40 years, particularly regarding housing.
Housing costs have never been higher or more burdensome for both renters and owners. Over 40% of renter households in the U.S. are paying more than the recommended 30% of their net income for housing, making them officially fit the description of “cost-burdened.”
Meanwhile, homeownership costs have grown to their highest-ever levels. The median sales price for a home in the U.S. was $467,700 in the fourth quarter of 2022, according to the St. Louis Federal Reserve. This is not only the highest homes have ever cost, but buyers are now paying up to thousands more in interest than they would have prior to 2021 thanks to the U.S. Federal Reserve’s tightening interest rates.
Researchers at the National Bureau of Economic Research compared national rent and ownership trends to isolate what caused already-rising housing prices to spike since late 2019. The report, authored in May 2022, is decisive about the cause.
“We show that the shift to remote work explains over one-half of the 23.8% national house price increase over this period,” the report reads. “Using variation in remote work exposure across U.S. metropolitan areas, we estimate that an additional percentage point of remote work causes a 0.93% increase in house prices after controlling for negative spillovers from migration.”
The national number of remote workers — who are twice as likely to earn more than the median income — tripled from 2019 to 2021, according to the U.S. Census. In short, they need more space and have the bankroll to pay for it, raising prices across the nation in the process of shuffling to less dense areas in the last three years.
This housing inflation affected both mortgages and rents, the report said. It concludes that other factors such as low-interest rates or high savings played as important of a role in the recent homebuying frenzy as recently believed. It also said remote work will likely plot the future of the nation’s housing.
“If remote work reverses, then there may be a general reversal in housing demand and potentially house prices. If remote work persists, we may expect important repercussions as increased housing costs feed into inflation and so affect the response of monetary policy,” the report said.