The COVID-19 pandemic drastically changed many elements of the world around us, including the housing market which has experienced major shocks that have impacted the perpetuity of life. Shifts such as technology innovations, access to employment and talent, and the transition to remote work have produced long-term effects on our economy.
Mckinsey and Company published an article discussing the future of work after COVID-19. In January of 2021, they performed an analysis across eight countries that found “20 to 25 percent of the workforces in advanced economies could work from home between three and five days a week”. This percentage is four to five times higher than what it was before the global pandemic. Nearly 40% of workers would consider quitting if their employers made the return to the office full-time says a survey done by the Insider. With this forecast, jobs that cannot offer this telecommuting option are suffering from being understaffed. As remote work becomes preferable, various changes to the geography of both individuals and companies have occurred. These changes have led to fluctuations in housing and job market demands as regional economies are adjusting to the movements of the labor force.
Low-interest rates on mortgages and the increase of working from home contributed to the eruption of the inflating housing market. Housing inventory reached an all-time low of 1.1 month supply in January 2021. Households who desired more spacious homes in suburban areas with city lifestyle perks overwhelmed the housing marketing with home mortgage applications, consequently overcrowding smaller cities as well. For example, Charlotte, North Carolina’s mortgage applications during the first quarter of 2021 increased by 466% year-over-year, according to Better.com. Due to the shortage of houses, the prices increased dramatically. Real estate online resources such as Realtor.com show the national median listing price increased 8.3% between January and April 2021.
Ken Tysiac, an author for the Journal of Accountancy stated, “business leaders will have to overcome the labor shortage by paying higher wages and implementing more automation and self-service options for their customers.” The productivity of companies operating short-staffed may crucially limit the availability of entry-level jobs. “1 in 16 workers will need to find a different occupation by 2030”, says Mckinsey and Company, “workers will need more advanced skills to move to occupations one or even two wage brackets higher.”
REMI recently hosted “Housing and Economic Recovery,” a webinar presentation that featured a study about the implications of the housing market and other economic factors post-COVED on economic recovery. REMI examines the demand of the housing market and its high inflation rate using REMI’s economic models, before interpreting what this means for our economy long-term. You can watch this full discussion here.
To read more about the surveys done by Mckinsey and Company, read here.
You can click here to read Ken Tysiac article about the pandemic recovery.
To find out more about the survey done by the Insider, click here.