The impact of COVID-19 and remote work on the housing market
Wednesday, August 19, 2020
Almost six months into quarantine, we have started to hear stories about people buying homes in the suburbs because they are working remotely. Suburbanites are heard complaining about overcrowdedness, and gossip at the playground is filled with tails of houses in rural areas selling well above their asking prices.
But, what does the data say — has homebuying in the suburbs truly been affected by COVID-19? And, perhaps more importantly, is it realistic to believe that companies will continue to allow their employees to work remotely when COVID-19 is no longer a threat?
COVID-19's Impact on the Suburban and Rural Housing Market
People want to buy in the suburbs because they can get more for their money. But, whether COVID-19 and its accompanying increase in remote work is the actual cause of homebuying in the suburbs is yet to be determined. That said, here is what we know:
According to recent Zillow Research, roughly 66% of employees working remotely due to COVID-19 are somewhat likely to consider moving if they can continue to work remotely as often as they wish. A similar finding published at Realtor.com from a HarrisX survey revealed that 63% of participants planning to buy a home in the next year expected to buy because of their ability to work remotely. However, we will need to wait to see how many of these respondents actually purchase a home in the next 12 months and whether they genuinely buy because of their ability to work from home.
In one sense, it does seem like COVID-19, and the newfound ability to work remotely is driving housing decisions. Pageviews of for-sale listings were higher this year on Zillow in mid-April than last year.
On the other hand, sales of existing homes are expected to be 15% lower in 2020 compared to 2019, and home construction is starting to slow, according to Realtor.com.
Beliefs about Remote Work
Buying a home because you can work remotely may save money and offer space for now, but is that short-term thinking?
When asked about what the future of work will look like, only 14% of respondents surveyed anticipated never returning to the office. Similarly, a mere 16% believed their employer would permit full-time remote work in the future, according to a HarrisX and Realtor.com joint study.
Most people think they will be back to part-time or full-time work at the office within the next three to six months.
Overall, 63% of respondents said their employer would probably be open to remote work in some capacity. In comparison, 40% predicted a mix of office and remote work, and 37% believed they would be required to be back at the office full-time.
For those who expect their employer to permanently allow full-time remote work, buying in the suburbs makes sense. For the rest, it may be best to balance enthusiasm with careful planning.
If you buy far from your office now, and then get called back to the office full-time, you would need to be prepared to float your mortgage while paying for the cost of a much longer commute, a second residence near your office, or unemployment while you find a new job closer to your new home.
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