SF Fed says that work from home has driven home price inflation
Great Article here from the SF Federal Reserve:
Basically, working from home causes inflation. People who work from home want bigger houses. This causes demand to grow for space, which raises prices and rents as well. Work from home they believe will stabilize at about 30%.
The Key Insight for Worcester
Cities with relatively cheaper and more housing available attract more remote work because people working from home want more space at home instead of using space at an office. This is what is driving the demand for housing in Worcester!
Benefits of Living in Worcester
If you don't have to go to Boston, where 1/6 of the jobs in the State of MA are, you can live in Worcester and have a better quality of life. Frankly, prices are still inexpensive here for what you can get.
Findings from the SF Federal Reserve
Conclusion:
The transition to remote work because of the COVID-19 pandemic has been a key driver of the recent surge in housing prices.
Using variation in how attractive cities are for remote work, Mondragon and Wieland (2022) demonstrate that the transition to remote work was directly responsible for 15 percentage points of national housing price growth since November 2019.
This suggests that the fundamentals of housing demand have changed, such that the persistence of remote work is likely to affect the future path of real estate prices and inflation.
WorcesterMulti's Local Conclusion
Prices in Worcester for quality housing in areas where people have access to nice level lots with parking will likely stay high as they are a great alternative for those who do remote work. The run-up on prices seen by all classes of houses will not continue. We have already seen demand destruction for houses in poor shape on the sides of hills with no parking. These are the last places people want to live, and they will see the steepest drop in demand both for purchase and for rentals.
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