(Bloomberg) — The shift to working from home has accounted for more than half of the increase in home prices and rents during the pandemic and is likely to drive up costs and inflation in the future as the shift becomes permanent, according to research from the Federal Reserve Bank of San Francisco.
โThe transition to remote work due to the COVID-19 pandemic has been a major driver of the recent rise in housing prices,โ economists Augustus Kemitz and John Mondragon, of the Federal Reserve Bank of San Francisco, and Johannes Wieland of the University of California, San Diego, wrote in a note published on Monday. .
The authors wrote that home prices rose 24% in the two years to November 2021. More than 60% of this increase is attributable to an increase in working from home during the pandemic โ a trend that has continued, with 30% of work still being done from home as of last month .
“This indicates that the fundamentals of housing demand have shifted, and the continuation of remote work is likely to affect the future trajectory of real estate prices and inflation,” the economists wrote.
The authors, who adjusted housing data to account for migration from expensive cities to affordable areas that occurred during the pandemic, found that each 1 percentage point increase in remote work results in a 0.9 percentage point increase in housing prices. The effect on rental rates was identical.
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