Can the Shift to Remote Work Turn Renters Into Homeowners?

Person sitting on the floor of a living room working o a computer.

New Opportunities for First-Time Buyers

In the final weeks of 2021, remote/hybrid work continues and is becoming standard. We see most U.S. office workers working remotely at least one or two days a week. A fourth of them continue to work from home offices every day. The past two years have clearly changed the way we work, and the way we view our home lives. For many, these will be lasting changes.

A Harvard business prof urges companies to maintain the work-from-home culture, citing positive productivity data, talent and diversity, a healthier gender balance on staffs, and the climate benefits of less driving. There’s still another benefit of the shift to work-from-home employment. It’s the increased potential for renters to find paths to homeownership.

Zillow® believes that the shift remote work could turn nearly 2 million renters into buyers. How?

The Freedom to Move

Many people who rent in the city to live where they work now have the option to work from various places other than their downtown offices. This new flexibility can make an office worker’s pursuit of home ownership feasible. By the same token, remote access to higher-paying positions can enable more workers to accumulate savings for home ownership.

Of course, not all jobs are fully remote. Many are now based on a hybrid system: mainly remote, with some in-person presence called for. The result? Workers have more flexibility in where they can buy, yet are still interested in living within a reasonable distance from the business site.

“If given the freedom to move, employees can work where they’re happiest and most productive,” says Meghan Reibstein, an organizational operations VP at Zillow — who calls this “a win for them, their organizations and their communities” in a company press release.

Significantly, the release also stated:

Remote work has the potential to bring the most significant expansion of economic opportunity and housing affordability witnessed in a generation or more. The ability to work and live anywhere is already opening up housing opportunities all over the country, widely benefiting first-time buyers and renters of color.

In a market where supply and demand imbalances have sent home prices surging, the expansion of employee choices is a win for the real estate, title insurance and loan industries too. Yes, home prices are higher than ever; but this is offset, to some degree, by the lower mortgage rates.

In short, remote work options are giving renters more life options, more time, and greater mobility — so more people can look for housing in affordable places to live.

Going Out of Their Way to Buy

Starting with the millennials, the younger generations are reaching home buying age. Some have spent years preparing to buy homes. Some young renters leveraged the 2020 business shutdown to their ultimate advantage by moving back into their parents’ homes, working remotely, and saving up for mortgages. Others simply saved by not going out, and not commuting or taking trips. Now, many of them are finally ready to buy.

Market research also indicates:

  • Younger homebuyers will go out of their way to buy. Now that they can work at a distance much of the time, they are willing to buy homes that are a long drive away from their workplaces. Zillow found younger buyers willing to drive two hours to work if it meant being able to afford a home.
  • Younger buyers expect to use their homes for work. While most working people who recently moved to buy homes want to work remotely, that expectation is strongest in younger generations.

It’s the Generation Z homebuyers — the youngest population of workers — who are most likely to have remote work options. And remote work is particularly common near tech hubs around coastal cities — precisely where mobility is most important to hopeful home buyers.

Millennials and post-millennials stayed in their childhood homes or rented for longer than their parents did. This means the generations have different views of real estate. Learn more about generational differences in home ownership here.

The main challenge ahead for real estate is to meet these buyers where they are and offer both affordability and financing options. The market is changing as it rises to the occasion. For example, lenders will be more likely to consider the loan applicant’s whole financial picture — not just a FICO score — in their decisions, thanks to the emergence of AI technology for lenders.

Young Snowbirds and Sunbirds

In a related sign of the times, corporations are understanding that employees can’t afford to live in many of the cities where they’ve established headquarters. So, they’re opening satellite sites in “second cities” nationwide. Real estate marketers are taking note. Coeur d’Alene, Idaho received top billing in the recent Emerging Housing Markets Index by the Wall Street Journal and®. 

In general, we’re seeing changes in placement and the very idea of an employment hub. The idea that a few coastal cities attract all the talent and offer the highest pay scales is shifting as mid-sized cities attract companies and home seekers.

Trend spotters are also noticing the emergence of “young snowbirds” since the rise of remote work. It’s not just the boomers moving to Florida and Arizona these days; young workers and web-based business owners are migrating to the southern states in wintertime too. Digital nomads are flocking to Miami and other “retirement” cities. Florida’s real estate industry is, in turn, targeting young professionals by blending resort-style perks with home-office design, and ample, well-equipped co-working areas.

Meanwhile, the Twin Cities are enjoying a “young sunbirds” effect as millennials from warm climates head to second homes up north in the summertime. Some of these homeowners are able to rent their sunbelt homes out while they’re away, through platforms like Airbnb.

Read more from about Airbnb: Why It’s Hot; How It Works.

Hopeful Homeowners Seize the Day  

Prior generations of workers were tied to their business locations. Their housing choices reflected that connection. The landscape is quickly shifting. By finding new opportunities for remote, hybrid, and self-directed work, many young buyers are finding their footing as homebuyers too.

Already, remote and autonomous work opportunities are giving young buyers workarounds as they outsmart a ridiculously pricey real estate market. They’re fashioning lives on their terms, in ways their parents could never have foreseen.

Supporting References

PR Newswire: Remote Work Will Fuel Housing Demand for Years to Come (Sep. 14, 2021). See Zillow® Press Release (via Bloomberg).

Cherry Creek Mortgage: Three Ways Remote Work Is Changing Home Buying (Oct. 2020).

Liz Hughes for Chicago Agent Magazine: Could Remote Work Fuel Housing Demand for Years to Come? (Sep. 21, 2021).® / HarrisX U.S. survey, March 26 – April 7, 2021. As cited by George Ratiu for Remote Work Is Highly Valued by 2021 Homebuyers (May 12, 2021).

George Ratiu for First-Time Buyers Embrace Homeownership in Challenging 2021 Housing Market (Mar. 25, 2021).

Pioneer Press (St. Paul): Reports – Permanent Remote Work Will Have Lasting Impact on U.S. Cities (Oct. 24, 2021), citing Urban Land Institute: Emerging Trends in Real Estate® 2022; see also PWC: Emerging Trends in Real Estate 2022.

Aly J. Yale for Young Snowbirds – The Pandemic Real Estate Trend We Didn’t See Coming (Sep. 29, 2021).

Photo credit: Andrea Piacquadio, via Pexels.