The affordability crisis of housing currently surpasses levels seen in the past four decades. However, the financial blow could have been substantially heavier were it not for the sustained influence of remote workforces and hybrid employment models – a side effect of the COVID-19 pandemic, as evidenced by a recent Fannie Mae study.
This comprehensive analysis was fashioned from data acquired from Fannie Mae’s National Housing Survey, a monthly examination pinpointing shifts in the housing market. The robust survey drew on insights from over 3,000 individuals spanning mortgage holders, homeowners, and renters in the January-March 2023 period and assessed how work approaches have evolved in recent years and their impact on housing trends.
The primary trend shows that an increasing number of people are willing to relocate further away from the urban office centres to places with lower living costs – an option endorsed by the constancy of remote and hybrid work models over the last couple of years. This option, the study reveals, is enabling many to navigate the steep curve of housing affordability.
Affordability emerged as the most imperative element across the board for both renters and homeowners hunting for a place to live. As the year opened, again showing the significance of affordability, 22% of the remote and hybrid workforce was open to moving to a different region or extending their commute. This sharply contrasted with the third quarter of 2021 when only 14% of such workers were amenable to an equivalent plan. This period was plagued by a widespread “return to work” movement stymied by the Omicron variant of the coronavirus.
With a mind-blowingly low housing inventory, the ability of remote and hybrid workers to divorce their decision of place to live from the necessity of proximity to their workplace can potentially mitigate the hefty housing prices by reducing competition.
When it comes to the inclination to relocate, the study manifests a growing trend across all age and income groups among remote workers since 2021. The divine discontent is more pronounced among younger workers, aged 18 to 34, who express a mounting willingness to either live or commute extra miles to accommodate work.
Working remotely, though marred by some controversial demands by the hierarchy of some notable firms, appears to be a deeply entrenched and enduring trend, the study found. The population that still works exclusively from home or blends home-based work with office reporting hovers around 35% this year, a minimal drop from last year’s 36%.
Meanwhile, the proportion of people pulling long hours at offices and worksites remains stuck at 49% since 2021. The percentage of those choosing full-time remote work rose marginally to 14% this year compared to last year’s 13%.
A consistent pattern from 2021 showed that homeowners, and those earning more, and more educated individuals were more likely to sustain a work-from-home setup. However, “affordability” is increasingly taking center stage as the crucial deciding factor in home hunting. With soaring rents, unyielding home prices, and mortgage rates at a 22-year record high, it is no wonder that affordability ranks highest at 36%, reflecting a significant shift from the top choice in 2014, which was “neighborhood” at 49%.
Interestingly, this shift was particularly distinct among renters, spiking from 21% in 2014 to 46% in 2023. despite the surge in the trend of moving for space, affordability still trumps home size as a deciding factor for the next home.
The researchers theorize that the housing market revolution steered by remote workers also carries wider implications for the interface between housing and the job market. The swelling ranks of remote-working renters and homeowners keen on distant abodes from the workplace open up an expansive labor market for employers. This could prove beneficial in cushioning the impact on local house prices if an economic downturn hit and caused a surge in job losses.
“Having access to a larger labor market may also reduce the adverse effect on local home prices when a major employer or industry contracts,” the researchers elaborated.
