Companies may want their workers “back at work” but housing costs make doing that prohibitive.
Housing Expensive Everywhere
Pre-pandemic, the most expensive real estate was in big cities, like San Francisco and New York, cities close to jobs. Now, housing prices have skyrocketed in suburbs and exurbs of big cities.
According to the National Association of REALTORS® (NAR), more than two in three metro areas saw median home prices increase at least +10% in the last three months of 2021 from Q3 2021. Over the past year, the median single-family home price rose +15% while median earnings rose by just +2.6% from one year ago. (Remember too to factor in rising consumer prices and inflation to this mix.)
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Home prices in exurbs and suburbs have jumped some +30% from February 2020, according to Nicholas Bloom, an economics professor with Stanford University who studies remote work. In city centers, home prices have increased about +5%.
Homeowners in exurbs who had searched for more affordable housing during the pandemic may be more than 80 miles from city centers and facing two or more hours of commuting to those city centers each way. Now that their employers are calling them back from remote working to on-site workers, those workers are saying, “No thanks.”
Hybrid Work May Be the Win-Win
Bloom believes that hybrid working could work for everyone. Most professional workers indicate, according to Bloom the economist, they want to come into the office 2.5 days a week. Hybrid workers could live farther away from the office in more affordable areas if going in just a few days a week and trade two or three “horrible days a week…for (living) far away with reasonable housing and good schools.”
Hybrid working would be less of a blow to downtowns because office workers would still be coming in a few days a week. Most downtown restaurants, bars and other businesses could still make it but the threat to commercial real estate prices would still be there.
Urbanist Richard Florida agrees. With fewer but still on-site office workers, central business districts could add more affordable housing, arts and cultural spaces, and what Florida calls “third spaces” where people can walk or bike to the amenities they want.
Service workers would still have jobs that cater to office workers but those service jobs may move to the periphery of metro areas where remote workers have moved. With jobs in periphery areas, service workers too could live in more affordable periphery areas or in rural locations.
Tight Labor Market Favors Hybrid Workers
Currently, according to the Department of Labor, there are some 11M open jobs. Employers who demand a return to the office may be on the short end of the stick.
A recent Pew study found that 61% of people working remotely are doing so by choice, not because their office is closed. Pre-pandemic only 36% were working remotely by choice.
According to an analysis by the University of Chicago, more than a third of all jobs, not just ones performed by people with college degrees, can be done remotely. When workers such as an assistant project manager for a Dallas construction company hears businesses call employees to return to office, those businesses may not realize how out of touch they sound with home prices up +30%, rents up some +16% and gas prices up +78% over the past two years.
What many of those workers say is, “I quit,” and two days later have another job lined up…a hybrid job.
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Thanks to TIME.
