Remote work levels drop in 39 of the 40 largest markets—what it means for housing

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Starting January 1, Starbucks will require its fully remote corporate staff to return to the office at least three days per week. Then, on January 2, Amazon will begin requiring its corporate staff to return to the office five days per week.

“To address the second issue of being better set up to invent, collaborate, and be connected enough to each other and our culture to deliver the absolute best for customers and the business, we’ve decided that we’re going to return to being in the office the way we were before the onset of COVID,” Amazon CEO Andy Jassey told corporate staffers back in September.

According to ResiClub’s latest analysis of U.S. Census Bureau data published this fall, the percentage of American workers who are fully remote fell to 13.8% in 2023. That’s down from 15.2% in 2022 and 17.9% in 2021. While that’s still significantly larger than the 5.7% of U.S. workers who were fully remote in 2019, it does mark a steady pullback from the pandemic peak.

For today’s article, we looked at WFH variation across the 40 largest metro area housing markets.

The finding? The share of fully remote workers has fallen in 39 of the 40 largest markets over the past two years.

Among the 40 largest metro area housing markets, these 5 markets have the LOWEST level of fully remote workers:

1. Providence-Warwick, RI-MA —> 10.8%

2. Riverside-San Bernardino-Ontario, CA —> 11.4%

3. Virginia Beach-Norfolk-Newport News, VA-NC —> 11.8%

4. Las Vegas-Henderson-Paradise, NV —> 12.0%

5. Houston-The Woodlands-Sugar Land, TX —> 12.6%

Among the 40 largest metro area housing markets, these 5 markets have the HIGHEST level of fully remote workers:

1. Austin-Round Rock-Georgetown, TX —> 24.9% 

2. Raleigh-Cary, NC —> 24.5%

3. Denver-Aurora-Lakewood, CO —> 22.3% 

4. Washington-Arlington-Alexandria, DC-VA-MD-WV —> 22.0% 

5. Charlotte-Concord-Gastonia, NC-SC —> 21.5%

A few thoughts:

1. A sharper than expected WFH pullback could leave some housing markets vulnerable. Let's say a recession occurs, and even more employers have the economic leverage to pull workers back into the office. In that scenario, the markets that have benefited the most from "WFH arbitrage" could be the most vulnerable to a housing correction. To a degree, we've already seen that in Zoomtowns like Austin and Boise.

2. WFH isn’t going back to 2019 levels. Even if employers gain more economic leverage and the return to in-person work gains additional momentum, remote work still isn’t likely to revert entirely to pre-pandemic levels from 2019. While some workers may be pulled back into the office, a complete reversal is improbable. Many employers have recognized that they need to offer at least some of their staff a work-from-home or hybrid option. This, so far, has been a tailwind for housing markets in the deep exurbs surrounding major metros, especially where homebuilding is also limited.

3. WFH levels continue to strain the office sector. Even with some return to the office, WFH—particularly hybrid models—remains well below pre-pandemic levels, perpetuating challenges for office real estate.

ResiClub PRO members (paid tier) can access historic WFH levels for over 400 regional housing markets at this link.

A decade+ of real estate investing: The good, the bad, the ugly

Earlier this month, ResiClub hosted the first-ever ResiDay in New York City, bringing together housing industry leaders and innovators to explore the future of residential real estate through expert panels, networking, and data-driven insights.

Among the industry leaders in attendance was Brian Dally, CEO of Groundfloor, an invest-tech platform with high-yield investments backed by real estate. Dally spoke with entrepreneur Anthony Pompliano about his over a decade-long experience building his company in the alternative real estate investing space.

"We realized that among all alternatives, most people wanted something tangible—not esoteric or hard to understand,” Dally said. “We got into residential real estate because 62% of Americans already own a home, making it a familiar product.”

Dally’s idea for Groundfloor proved right. Just over a decade later, the platform has over $1.4 billion invested, with portfolios made by financial market savants and beginners alike. Moreover, he thinks the space is just getting started.

"I think the same thing is happening in alternative investments as we saw happen in public market investing,” Dally says. “Charles Schwab started the first discount brokerage in 1974 in the wake of the SEC's deregulation of stock trading commissions. Decades later we saw the rise of platforms like E*TRADE, and even later, Robinhood and meme stocks.”

Dally added that: “I think if you fast forward 30 to 50 years, we'll see alternative investments follow the same path.”

Here are 3 key insights Dally made in his ResiDay interview:

1. There’s a strategic advantage in short-term loan investments: Dally says the main hurdle with a lot of alternative investments, specifically real estate, is illiquidity. Investing in short-term loans (6-to-18 months) allows Groundfloor investors to adjust swiftly to market conditions, input costs, and exit values, reducing exposure to long-term risks and market volatility.

2. Targeting affordable markets was a recipe for success: One of Groundfloor’s long-term bets is on the popularity of short-term loans for value-added improvements on existing housing stock. So from the jump, the company focused on lending in less expensive real estate markets with high liquidity providing stability, helping preserve property values, and ensuring continued transaction activity, even during economic fluctuations.

3. The market resilience of alternative investments: Despite rising interest and mortgage rates, a broader, more secular trend toward alternative investments keeps retail investors investing through platforms like Groundfloor. Additionally, in the real estate space specifically, home prices remain well-supported due to strong supply and demand dynamics, preserving good margins for the company.

On Tuesday, we learned that U.S. existing home prices, as measured by the Case-Shiller National Home Price Index, fell -0.1% between the August 2024 and September 2024 reading. That's a soft-ish print for that seasonal month-over-month window.

Year-over-year: +3.9%

Year-to-date: +4.4% 

Since the 2022 peak: +5.4% 

Since March 2020: +50.9%