Remote work may trigger a 'suburban boom' in real estate

SEATTLE - With large tech companies like Amazon and Microsoft extending their work-from-home policies until the fall due to the COVID-19 pandemic, economists are predicting that real estate trends might shift and cause a "suburban boom" in the housing market.

In a newly released survey, the Seattle-based Zillow Group found that 75% of Americans working from home due to COVID-19 would prefer to telecommute at least half of the time once the pandemic subsides, and 66% said they would consider moving if their job allowed them to continue telecommuting.

These trends in the job market are leading economists to predict that post-pandemic housing preferences may move away from dense metropolitan areas due to the virus and more lenient work-from-home situations.

"Moving away from the central core has traditionally offered affordability at the cost of your time and gas money. Relaxing those costs by working remotely could mean more households choose those larger homes farther out, easing price pressure on urban and inner suburban areas," said Zillow senior principal economist, Skylar Olsen.

As people reconsider housing options in conjunction with remote work, the amount of space desired by home shoppers will also shift. Zillow predicts that larger homes, especially those with extra rooms or home offices, will be in high demand.

Additionally, the growing affordability crisis in cities may also have a major impact on the suburban real estate surge. But proximity to a metropolitan center is still crucial. Redfin CEO Glenn Kelman predicted that people will move to nearby suburban areas like Tacoma to be able to make office visits in Seattle when necessary.

"More permissive policies around remote work and a rising wariness about close quarters will likely accelerate that trend," Kelman said in a May earnings call. "More people will leave San Francisco, New York and even Seattle, some for nearby towns like Sacramento and Tacoma that are close enough to support a weekly office visit, others for a completely remote life in Charleston, Boise, Bozeman or Madison."

According to the Pew Research Center, only 7% of American workers had the option to telecommute as a benefit prior to the COVID-19 pandemic although over 40% of jobs could be performed remotely. With more employers seeing that remote work is a possibility, this gap may narrow once the pandemic is over.

However, a shift to living further out of the metropolitan core is not without its drawbacks, which is why Olsen and other economists do not predict that the market surge will extend to more rural areas.

"However, [moving way from cities] means they'd also be moving farther from a wider variety of restaurants, shops, yoga studios and art galleries," said Olsen. "Given the value many place on access to such amenities, we're not talking about the rise of the rural homesteader on a large scale. Future growth under broader remote work would still favor suburban communities or secondary cities that offer those amenities along with more spacious homes and larger lots."

A move to suburban areas is not the only way COVID-19 is expected to impact the housing market. For those selling their homes, a decrease in the GDP can mean a drop in value.

Using a baseline prediction that the GDP will drop 4.9% in 2020, Zillow economists also predict that home prices nationwide will fall between 2-3% through the end of the year and only return to pre-coronavirus levels by late summer of 2021.

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