Source: KSL —
SALT LAKE CITY — The sudden shift to remote work amid COVID-19 drove more than half of overall U.S. housing price growth during the pandemic — and as it becomes more embedded in our day-to-day life, it’s likely to continue to drive up home prices as well as inflation.
That’s according to new research published Monday by the Federal Reserve Bank of San Francisco, an economic letter titled “Remote Work and Housing Demand.”
“The transition to remote work because of the COVID-19 pandemic has been a key driver of the recent surge in housing prices,” wrote the letter’s authors, economists Augustus Kmetz, John Mondragon and Johannes Wieland.
As U.S. home prices have surged at unprecedented rates — by a rapid 24% between November 2019 and November 2021 — the researchers wrote the surge has “led to questions about whether the price increases are being supported by fundamental factors, such as the shift in demand from remote work, or driven by speculation, in part fueled by fiscal stimulus and accommodative monetary policy.”
One concern, they noted, has been that house prices could “pose a risk to financial stability, like the bubble that preceded the Great Recession. Furthermore, faster growth in housing costs has contributed to inflation, which has been running at its highest levels since the 1980s, creating challenges for achieving the Federal Reserve’s price stability mandate.”
While researchers at the Federal Reserve wrote in a June report that low borrowing rates amid the pandemic likely did help drive demand, the analysis published Monday found the shift to remote work “accounts for more than half of overall price growth over the pandemic.”
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