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Housing Demand and Remote Work

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  • John A. Mondragon
  • Johannes Wieland

Abstract

What explains record U.S. house price growth since late 2019? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period. Using variation in remote work exposure across U.S. metropolitan areas we estimate that an additional percentage point of remote work causes a 0.93 percent increase in house prices after controlling for negative spillovers from migration. This cross-sectional estimate combined with the aggregate shift to remote work implies that remote work raised aggregate U.S. house prices by 15.1 percent. Using a model of remote work and location choice we argue that this estimate is a lower bound on the aggregate effect. Our results imply a fundamentals-based explanation for the recent increases in housing costs over speculation or financial factors, and that the evolution of remote work is likely to have large effects on the future path of house prices and inflation.

Suggested Citation

  • John A. Mondragon & Johannes Wieland, 2022. "Housing Demand and Remote Work," NBER Working Papers 30041, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30041
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    Cited by:

    1. Zheng Liu & Mollie Pepper, 2023. "Can Monetary Policy Tame Rent Inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2023(04), pages 1-6, February.
    2. Sandro Heiniger & Winfried Koeniger & Michael Lechner, 2022. "The Heterogeneous Response of Real Estate Asset Prices to a Global Shock," Swiss Finance Institute Research Paper Series 22-86, Swiss Finance Institute.
    3. Howard, Greg & Liebersohn, Jack & Ozimek, Adam, 2023. "The short- and long-run effects of remote work on U.S. housing markets," Journal of Financial Economics, Elsevier, vol. 150(1), pages 166-184.
    4. Alan Feng & Haishi Li & Yulin Wang, 2023. "We Are All in the Same Boat: Cross-Border Spillovers of Climate Shocks through International Trade and Supply Chain," CESifo Working Paper Series 10402, CESifo.
    5. Erdsiek, Daniel & Rost, Vincent, 2022. "Working from home after COVID-19: Firms expect a persistent and intensive shift," ZEW Expert Briefs 22-06, ZEW - Leibniz Centre for European Economic Research.
    6. Ferdinando Monte & Charly Porcher & Esteban Rossi-Hansberg, 2023. "Remote Work and City Structure," Working Papers 2023-016, Human Capital and Economic Opportunity Working Group.
    7. Steven Bond-Smith & Philip McCann, 2022. "The work-from-home revolution and the performance of cities," Working Papers 2022-6, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    8. Stijn Van Nieuwerburgh, 2023. "The remote work revolution: Impact on real estate values and the urban environment: 2023 AREUEA Presidential Address," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(1), pages 7-48, January.
    9. Arpit Gupta & Vrinda Mittal & Stijn Van Nieuwerburgh, 2022. "Work From Home and the Office Real Estate Apocalypse," NBER Working Papers 30526, National Bureau of Economic Research, Inc.
    10. Burdett, Ashley & Etheridge, Ben & Wang, Yikai & Tang, Li, 2023. "Worker productivity during Covid-19 and adaptation to working from home," ISER Working Paper Series 2023-04, Institute for Social and Economic Research.
    11. Jinwon Kim & Dede Long, 2022. "What Flattened the House-Price Gradient? The Role of Work-from-Home and Decreased Commuting Cost," Working Papers 2205, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    12. Brueckner, Jan K. & Sayantani, S., 2023. "Intercity impacts of work-from-home with both remote and non-remote workers," Journal of Housing Economics, Elsevier, vol. 59(PB).

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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