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Housing Demand and Remote Work

John A. Mondragon and Johannes Wieland ()

No 30041, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E31 E66 M11 R21 R31 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-mac and nep-ure
Note: EFG ME PR
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