Technology has revolutionized how business is done, allowing workers to escape the office and work from anywhere. This, combined with employment gains and a shift from a labor-based to knowledge-based economy, is impacting home prices across the country.
Broadening Notions of the Workplace
Many of the newly created American jobs are what the U.S. Bureau of Labor Statistics calls “professional and business services.” This can include anything from software design, to financial analysis, or managing accounts at a public relations agency – all professions that can be done as well or better from a home office. As of August of this year, 519,000 additional professional services jobs were created.
A significant number of these positions are performed largely or entirely online, using cloud services, software-as-a-service platforms and similar tools. These roles don’t require staffers’ regular presence in an office, as some remote employees only set foot in company headquarters a few times a year, if ever at all. Video conferencing, organizational instant messaging services and other tools ensure communication doesn’t fall by the wayside. As a result, the companies involved save operating capital that would go toward office space.
Workers are thinking about money as well, given the high costs of living in major cities that are home to high-demand industries. To make ends meet, employees may pursue jobs with the option to telecommute and look for housing in less expensive markets.
Different Generational Values
The desire to telecommute certainly isn’t contingent on age. That said, the growth of the millennial workforce plays a role in both the increase of remote employment and the popularity upswing among cities that were once undesirable to young professionals. Part of this is sheer size: Pew Research Institute data confirmed millennials’ status as the largest generation in the labor force, comprising 56 million people as of mid-2018.
Why would young professionals born after 1980 be so enthusiastic about working from home? Primarily, it’s the desire to find and maintain work-life balance. Many times, this need supersedes the monetary motivation. According to a 2016 study by Fidelity Investment, the average millennial employee will take a job that pays $7,600 less than another as long as it improved the quality of their professional lives. 58 percent of those surveyed also said a better working situation was more important than money.
Major Potential in Some Cities
Cleveland and Pittsburgh, once major industrial centers in the old labor-based economy are starting to flourish in the knowledge-based era. As both cities turn things around, more people are seeing the potential in these possibility-rich cities, driving up prices.
Average home prices in Cleveland, for example, crashed in the wake of the global financial crisis. Today, prices are at an all-time high.
Further evidence of Cleveland’s resurgence came with data from the Federal Bureau of Economic Analysis. Their report found Cleveland’s economy grew more substantively in 2017 than other Ohio cities like Cincinnati and Columbus, reaching 2.9 percent expansion. Professional services played a significant part in this.
Pittsburgh has experienced a similar upswing, with prices and new highs since Q4 2018.
A New Western Frontier
Denver real estate has been hot for several years, so its presence on Curbed’s list of notable estate markets in 2018 is no surprise. Infrastructure improvements came after considerable business growth within the metro, and new complexes are cropping up in all of its neighborhoods.
The groundswell in Denver has spread the telecommuting trend throughout Colorado. Smaller metros like Greeley and Colorado Springs, located a few hours from Denver, have seen their own jumps in prices and sales of late. Greeley averaged home sale prices of $340,000 in July 2018, while Colorado Springs’ came in with a $302,000 average price per home. Both were in Pro Teck’s list of the 10 hottest CBSAs as of July 2018.
As economic restructuring and telecommuting continue to transform conventional notions of work and urban homeownership, we believe other lagging metros will see an uptick in their desirability in the near future.
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