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‘Suburban housing prices increased due to WFH’

The Times of India logo The Times of India 17-11-2022 Pearl D'souza
© Provided by The Times of India

NEW DELHI: Work from home has driven a demand for suburban housing and thereby raised the prices per square foot there, as per a study by Jan K. Brueckner, distinguished professor of economics, University of California, Irvine.

Brueckner was talking at an international conference themed ‘Covid19 and cities: Is it merely short term or has it changed our cities forever?’ on Thursday.

Through his study which aggregated data from the postal services -- indicative of people’s change in location -- and American tech real-estate marketplace company Zillow that indicated the house prices data and rental data, he established that people moved from their work centres to suburbs or other cities that were cheaper.

"Under WFH, workers could consider their choice of residential locations. With office trip frequency reduced, the annualised commuting costs would fall. This makes suburban locations, where housing is cheaper, more attractive, spurring decentralisation of cities," he said.

He added that demand for suburban housing rose and pushed up the prices in suburbs. He also observed a more dramatic type of relocation -- moving between and not within cities.

Due to this intercity relocation, the implication was that the population fell in expensive cities whose jobs have a high work-from-home potential and put downward pressure on housing prices and rents. Brueckner explained that although prices did not go down, the rate of increase had definitely fallen.

Brueckner added: “Long after Covid has ceased to be a problem, its effects on the structure of work will be felt. The pandemic has forced work from home and made people realise its feasibility and befits and the effects are unfolding as the economy evolves,” he said.

About the impact of work from home on the economy where jobs are produced, he added that when downtown workers disappear and are not physically present, then supporting businesses like the food and retail industry do have a negative effect, which is also seen in a place like New York City.

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