The ability to work remotely during the COVID-19 pandemic has kept the national economy going and has also had a profound impact on the demand for real estate. But could the “work-from-home” economy be in the early stages of winding down, and if so, how could that impact the real estate market in the Aspen-Snowmass area?
Today’s news is all about the dramatic drop in coronavirus cases across the country. The seven-day average has gone from a peak of 246,000 cases in mid-January to about 94,000 by mid-February, a 62% decline. Experts believe this dramatic drop is attributed to the end of the winter holiday season case surge and quickening pace of the vaccine rollout. As more areas of the country end lockdowns and open their economies, it appears the coronavirus pandemic could quickly be entering the rearview mirror.
Going forward, is the work-from-home economy going to drive real-estate values as we’ve seen this past year? How the remote-working trend plays out in the future could give us some indication of how real estate markets like Aspen and Snowmass will perform in the future as well.
The work-from-home economy that exploded in the past year has been one of the key drivers of the boom in suburban, rural and resort real estate markets across the country. The work-from-home trend has also impacted home design and construction as more people wanted professional office space at home. Companies like Zoom, one of the primary beneficiaries of the work-from-home economy, in one year saw triple-digit growth in subscribers and its stock price increase by 350%. There is no doubt, the work-from-home requirement has changed many aspects of our lives from social interaction to how and where we want to live.
Although the work-from-home trend started as a necessity a year ago as offices closed across the country, for many companies like Microsoft, Twitter and Facebook, it’s become a permanent option, at least for the foreseeable future. A recent global survey showed that 82% of corporate managers plan to offer flexible work-from-home policies after the pandemic ends. Companies see permanent benefits such as the reduced need for office space and being able to pay their remote employees less. Surveys also show that a significant number of workers would like to continue working from home as much as possible even when the pandemic is over.
As the pandemic passes, though, people who fled cities like New York, San Francisco and Chicago for the suburbs and rural areas are likely to miss the social energy, and the cultural and career opportunities that large cities have to offer.
This is especially true among younger workers who have missed the social interaction during the pandemic in larger cities. Surveys have shown that the largest segment of individuals who moved during the pandemic were younger, not older. Of those that moved recently due to the pandemic roughly 10% are in the 18-29 age range, 3% in the 30-45 age range, 2% of those aged 45-64, and only 1% for those age 65-plus.
Currently, more than 50% of workers across the country are 100% remote with another 20% somewhat remote.
Recent surveys now show that up to 75% of workers, for various reasons, would prefer to return to their offices. The reasons why workers want to return to their offices include the desire for social interaction, networking opportunities and career advancement that may only be available if one is around core decision-makers on a daily basis. Remote workers are also starting to see reductions in their salaries as companies start adjusting pay scales based on where workers are now living. The cost of living in Colorado could be significantly less than living in New York City or San Francisco.
Although it’s been proven that working remotely is doable out of necessity, over the long term, it may not be the preferable situation for most employees. A reverse in the work-from-home trend could have an impact on demand for real estate in the suburbs and more rural areas like the Roaring Fork Valley and resort markets like Aspen and Snowmass. Sudden demographic migrations, like the recent one caused by the pandemic, are a once-in-a-century event. Just like the mass overnight migration caused by the pandemic that no one foresaw, what happens after the pandemic may surprise people as well.
As Yogi Berra once said, “It’s tough to make predictions, especially about the future.” This could also be the case for how a return to the workplace trend could impact the local real estate market.
Lori and William Small, CCIM are luxury and commercial real estate experts with Coldwell Banker Mason Morse in Aspen. They can be found through their website theSmallsaspen.com or by email at thesmalls@theSmallsaspen.com.