Work-from-home migration has changed the real estate market

The real estate market continues to be shaped by an enduring economic trend we got from the pandemic: work from home. The government says roughly one third of U.S. employees do some or all of their work from home. And the St. Louis Fed dropped a new report showing that nearly half of people working from home — who moved to a different state — moved because of housing. That’s different from what they saw with commuters, who were more likely to move because of their jobs.

As people who work from home make real estate decisions, their calculus gets to be more about what they care about.

“Do I want to live somewhere that’s affordable? Do I want to live somewhere that has good weather? Do I want to live somewhere where my family is?” said Ali Wolf, chief economist with real estate data firm Zonda.

And while housing affordability continues to be a challenge, flexibility for this group of workers means that, “there are new states that are cropping up in the discussion of home builders: Arkansas, Oklahoma, Missouri, Kansas. We even know parts of Montana and Wyoming have become more attractive than they were before the pandemic,” Wolf said.

Working from home has allowed some families to move to less expensive regions to buy real estate. But it’s also had another effect. Harvard housing researcher Alex Hermann said, in the years following the pandemic, home prices rose a lot everywhere.

“But they rose especially rapidly in more rural areas, in smaller markets and in lower density counties of large metro areas,” Hermann said.

So, incoming remote workers — who tend to be wealthier — benefit from the cheaper housing. But they’re making homes less affordable for the residents who were already there.