Bloomberg News reports that transitioning from a physical office to remote working led to increased rent and the cost of homes. This happened due to the pandemic and is likely to continue and will cause the costs to go up further. With impending inflation, this transition will become permanent, which was revealed as per research conducted by the Federal Reserve Bank of San Francisco.
Economists John Mondragon and Augustus Kmetz of the San Francisco Fed revealed the transition to remote work from physical office during the coronavirus pandemic is the main reason that has driven the price of homes higher. Johannes Wieland of the University of California San Diego agreed with the same idea, as he mentioned the same in a note on Wednesday.
As the author wrote, the cost of a house surged by 24% in the last two years that ended on November 2021. The increase exceeded 60% and is attributable to a surge in the work-from-home mode that started during the pandemic. It is a trend that has continued to persist, with about 30% of the work being continued from home even over the past month.
The economists also revealed, as per Bloomberg News, that the fundamentals of demand in housing have changed so that the continued remote work will very likely impact the future pathway of the prices in real estate and have an impact on inflation.
Those authors that adjusted the housing data to constitute migration from the expensive regions to the affordable ones during the pandemic also found that every 1% point surge in results of remote work resulted in about a 0.9% point increase in the price of houses. The effect on the price of rental property has been similar.
