Under a Hot Housing Market, an Even Hotter Rental Market

Yahoo/Finance

by Javier E. David·Editor focused on markets and the economy,

In an article posted December 31 the author posits that work from home is causing a boom in housing and rental prices across the country. 

The WFH phenomenon has helped to drive up rent prices around the country, and in fact was one of the biggest stealth inflationary trends of 2021. In a recent analysis, Quartz reporter Camille Squires found that rents and home prices are soaring anew after a brief lull, thanks to a convergence of two powerful supply and demand forces:

Families looking to buy their first house are being shut out of the market, pushing up demand in the rental market. But this time they’re also rising at a much faster clip than before as property owners make up for lost income during the pandemic.

In Manhattan (where most big-money New Yorkers live), the average salary is over $86,000, according to Adzuna, a job search engine. And in the borough, average prices for apartments of various sizes soared by double-digits in 2021, according to MNS Real Estate data. Wanting a doorman will cost renters significantly more, the firm noted.

According to economist and Bloomberg columnist Karl Smith, rent increases have been “more substantial” in places like Tennessee and Idaho, underscoring how “the work-from-home trend has led some well-paid professionals to ditch the city in favor of more rural environs.”

Smith added that working from home “also seems to be pushing some folks toward lower-cost locations. These younger professionals, with incomes that count as modest if they live on the coasts but are still above the national average, have not only substantial purchasing power but sometimes also new families that need housing.”

And with big companies like Google (GOOG), Apple (AAPL), Lyft (LYFT) — and Yahoo Finance’s own parent company Yahoo — all backing away from return-to-office plans set for January, it suggesting that the WFH effect on housing prices will become more entrenched in the face of soaring infections and new variants.

Read the full article.