The median price of a single-family home in the U.S. reached $397,000 last month, yet another all-time high. Apartment rents have also been surging.
While low mortgage interest rates and low inventory are contributors, fresh research says that over half the increase in home prices since the pandemic started can be explained by two words: remote work.
Picture two roommates in a cramped apartment. Let’s say that reserving Zoom time in the only bathroom isn’t working out too well. So, they split up.
“There were two people happy with one apartment. Now, two people each want one apartment. The total demand for housing for these two people has doubled,” said Johannes Wieland, who teaches economics at the University of California, San Diego.
His research suggests remote work supercharged apartment rents last year, and the desire to Zoom in peace has increased for-sale home prices 15%.
“The dollar value of a square foot of housing has gone up because we want that extra space now to do our work at home,” Wieland said.
Remote work will keep changing the housing market, according to Zillow economist Jeff Tucker.
“Now, as more people are seeing this turn out to be a permanent arrangement, they’re taking that information and incorporating it into a home purchase decision,” he said.
Zillow predicts housing prices will rise through 2023.
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