By Anna Bahney, CNN
Washington, DCCNN
Housing is less affordable than it has been in about four decades. But buying or renting a home might be even less affordable now if it weren’t for the continuing impact of remote and hybrid workers that resulted from the pandemic, according to a recent study by Fannie Mae.
The study, which was an analysis of Fannie Mae’s monthly National Housing Survey, with questions asked among more than 3,000 mortgage holders, owners, and renters between January and March this year, looked at how remote and hybrid work has changed over the past few years and its impact on housing.
More people are willing to move to less expensive areas further away from offices in city centers than a few years ago, according to the report. Continuing remote and hybrid work, at levels remarkably unchanged from two years ago, is enabling people to move toward housing affordability, the study found.
The report also revealed that “affordability” is the most important factor in finding a place to live, both for renters and homeowners.
At the beginning of the year, 22% of remote and hybrid workers said they would be willing to relocate to a different region or increase their commute. Only 14% of such workers were willing to do so in the third quarter of 2021, which is used as a comparison throughout the study and was when many workplaces attempted a “return to work” until the Omicron variant of Covid-19 pushed many employers’ plans back that winter.
Home affordability is the worst it has been since 1984
Workers who are able to break their ties to living in an area because of its proximity to work are able to spread out, reducing the competition for a historically low number of homes for sale that could push prices even higher.
The research showed that among remote workers, all age and income groups have grown more willing to relocate or live farther away from their workplace since 2021. But younger workers – those between 18 and 34 – are significantly more willing than those older than them to live or commute a further distance from their work, with the share willing to do so jumping from 18% in 2021, to 30% in 2023.
“We believe this greater willingness to live farther from the…workplace may be an indication that some workers are feeling more secure about their remote work situation…or their ability to find another job if their current employer were to change its policies,” wrote the researchers, in a summary.
This is good news for remote workers during a time of crushingly low levels of home affordability.
Where we work now
Remote and hybrid work may be here to stay. Or, it’s here long enough for people to buy or rent a new home because of it, the researchers found.
Despite the demands by leaders of some prominent companies that workers need to head into the office or head out the door, the share of fully remote and hybrid workers has remained surprisingly constant in the post-pandemic era, according to the study.
In the first part of the year, 35% of respondents worked fully remote or worked a hybrid mix of sometime at a workplace and sometime at home. That was only slightly down from 36% in 2021.
While the share of workers going to a work site or office every day was unchanged at 49% in both 2021 and in 2023, the share of people working fully remote ticked up to 14% this year from 13% in 2021.
Return-to-office mandates won’t magically improve young employee’s career development.
Homeowners continue to be slightly more likely to work from home than renters. And those with more education and higher incomes are also more likely to have a work-from-home situation, which is consistent with 2021,the study found.
Only 30% of lower-income people, earning 80% of the area median income, could work remotely or hybrid in 2021, and that dropped to 27% by this year. Meanwhile 42% of upper-income people, those making 120% of the area median income, were able to work from home in 2021 and that number did not change in 2023.
Lower-income people – who are in most need of access to lower-cost housing, found further away from a city’s core – are also those least likely to work remotely, according to the survey.
‘Affordability’ has become most important
With housing affordability taking a hit over the past few years as rents rose, home prices stayed elevated and mortgage rates soared to a 22-year high, it is not surprising that “affordability” was the top factor for people when picking a new home, at 36%. This was a big jump from 2014, the last time the question was asked, when the top consideration was “neighborhood” at 49%.
Homeowners and renters both showed growth in prioritizing “affordability,” but the increase was greatest among renters, shooting up from 21% in 2014 to 46% in 2023.
“The change in preference for renters is truly remarkable, since not only did it more than double, but it represented a complete reversal of the relative importance of neighborhood cited by consumers as the top consideration in 2014,” wrote the researchers.
In addition, despite the talk about moving for more space, “home size” as a factor for picking a next home was unchanged and still outweighed by “affordability.”
Shopping for a home? There’s a lot working against you right now
“The striking shift toward affordability as the top consideration among overall survey respondents for their next move substantiates the need of households to find ways to manage around the significant rise in mortgage rates, home prices, and rents of the past few years,” the researchers wrote.
And this is impacting where people look for a home and what they prioritize when they are searching.
“Home affordability may also be a reason why we saw an increase in remote workers’ willingness to relocate or live farther away from their workplace, particularly given that, historically, a shorter commute to denser job markets was considered a premium amenity,” the researchers wrote.
The suburbs are increasingly where people want to be, the report found, which is part of an ongoing trend since 2010. And that share has grown between 2021 and 2023.
The researchers say the change to the housing market brought about by remote workers holds broader implications for the link between housing and the labor market.
The growing share of remote-working renters and homeowners willing to live farther from their work location gives employers access to a wider labor market, which could be useful if a downturn in economic activity led to greater rates of job loss.
“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 wrote.
About Brooke Chase Associates, Inc.
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