Remote working is chiefly responsible for the soaring home prices and rentals in the United States, according to a study by the US central bank, the Federal Reserve (Fed).
Housing prices rose around 24% between November 2019 and November 2021, with remote working contributing more than 60% to that increase, according to the Fed’s study. About 30% of work is still being done remotely in the country, as of August 2022.
The central bank attributed part of the blame for inflation on remote working too. It has yet to be confirmed whether the demand for office space declined due to working from home.
“At the same time, we find no evidence that the push to remote work had a similar effect on nonhousing-related prices and that it may have even had a negative effect on commercial rents,” the report noted.
The Federal Reserve expects home prices to be determined by remote working trends in the months to come.
“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 house prices and inflation,” wrote San Francisco Fed economists Augustus Kmetz and John Mondragon, as well as Johannes Wieland of the University of California, San Diego, in a note released late September.