The shift to remote work during the COVID-19 pandemic accounted for 60% of the increase in housing prices since 2019, according to research published today by the Federal Reserve Bank of San Francisco. In their paper, the researchers said that the share of work being done from home grew from 5% to 60% during the pandemic, although that figure has since stabilized to around 30%. They calculated the effects of the behavior shift on housing demand using consumer credit bureau data and other sources. The increase in remote workers resulted in house prices rising by about 15% from November 2019 to November 2021, making it responsible for more than 60% of the overall increase in prices during that time frame, the authors estimated.
The researchers also concluded that the shift to remote work had identical effects on rents but added there was no evidence to suggest a similar effect on nonhousing prices, and that the shift may have even had a negative effect on commercial rents. “This suggests that the fundamentals of housing demand have changed, such that the persistence of remote work is likely to affect the future path of real estate prices and inflation,” the authors said.