Remote working has and continues to redesign real estate’s “new normal.”
Remote Working & Mobility Share #1 Impact on Real Estate
At the height of the coronavirus pandemic in 2021, the Counselors of Real Estate(CRE), a global consortium of the top 1,000 real estate professionals in 20 countries and territories around the world, published its annual report titled “2021-22 Top Issues Affecting Real Estate.”
CRE ranked “remote working and mobility” as the #1 issue affecting real estate in 2021-2022. “Housing supply and affordability” ranked #6.
Michael Couillard, CRE’s 2021 global chair, said, “After years of…(a) trend towards urbanization, the pandemic generally caused the movement away from urban cores…”
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Remote Working Here to Stay
Arvind Krishna, CEO of IBM, said that his company, a company that employs nearly 300,000 workers, according to Fortune, is an example of what happens when workers can work remotely. At June’s end in 2022 at the Aspen Ideas Festival, Krishna said that only 20% of his company’s workers are coming into the office at least three days a week. He added that he believes IBM will never get back to having 60% of its workforce back in the office more often than not.
Of course, IBM isn’t the only company that has implemented pandemic-spurred permanent remote work policies. Think Google, Microsoft Twitter, 3M, Spotify, Square, Facebook, REI, Atlassian, Slack, and Facebook to name just a few of the most well-known companies that have already or are transitioning to work from home (WFH) arrangements, according to CNBC.
In other words, it’s more than likely that remote work is here to stay.
Combination of Remote Work & Affordability = Sunbelt Boom
Combine the “new normal” reality of remote work with the key factor of affordability and you’ve got non-urban real estate markets with relatively lower median home listing prices that have benefitted from relocating homebuyers.
Think Southwest markets such as Austin, Boise, Las Vegas and Ogden-Provo. Even as the real estate market is cooling due to fast rising mortgage interest rates, high home prices, low inventory, high inflation, a volatile stock market and an uncertain economy, demand is still outpacing supply. BUT, will such outpacing demand for not enough for-sale homes continue to push home prices up?
Home values in Austin TX increased a massive +32.4% last year alone and are expected to increase another +10.5% by May 2023, according to Zillow’s Home Value Index.
Will Sunbelt Boom Become Sunbelt Bust?
HOWEVER, a recent collaborative study from Florida Atlantic University andFlorida International University ranked the largest 100 US metro housing markets that are considered to be overvalued. (Actual prices paid came from the Zillow Home Value Index.)
All metros ranked in the top four of this study are Sunbelt housing markets. Take a look:
- Boise City ID
– Overpriced by 72.6%
– Average price of April 30 – $516,548
- Austin TX
– Overpriced by 67.70%
– Average price of $594,473
- Ogden UT
– Overpriced by 64.73%
– Average price of $325,264
- Las Vegas NV
– Overpriced by 61.48%
– Average price as of April 30 – $437,478
Thanks to Forbes, CRE, CNBC and Zillow.
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