A New Spatial Hedonic Equilibrium in the Emerging Work-from-Home Economy?

Abstract

This paper studies the impacts of work from home (WFH) in the housing market from both intercity and intracity perspectives. Our results confirm the theoretical prediction that WFH puts downward pressure on housing prices and rents in high-productivity counties, a result of workers starting to relocate to cheaper metro areas during the pandemic without forsaking their desirable jobs. We also show that WFH tends to flatten intracity house-price gradients, weakening the price premium associated with good job access. (JEL J24, J31, J61, R21, R23, R31)

COVID‐19 and the urban housing affordability – evidence from select Indian cities

“…These explanations and assumptions are consistent with the findings of Brueckner et al (2023) and Ramani and Bloom (2021) for cities in the USA, who found that the pandemic essentially led to a ‘donut’ effect in housing where the central ring of cities was deserted in favour of the suburbs. This is a phenomenon which may quite well be true for Indian cities too.…”

“…The hybrid mode nonetheless means that the workforce cannot leave the cities now as they did earlier (moving to their hometowns or smaller cities in India). Due to this effect, some United States studies (Brueckner et al, 2023; Ramani & Bloom, 2021) found that the pandemic essentially led to a ‘donut’ effect in housing where the central ring of cities is deserted in favour of the suburbs. Melo (2022) found, unsurprisingly, that the pandemic setback public transport and sustainable urban mobility.…”

From L.A. to Boise: How Migration Has Changed During the COVID-19 Pandemic

“…1-standard-deviation increase in the relative state marginal income tax rate associated with approximately 2.4% fewer moves, consistent with the theoretical predictions of Brueckner et al (2023) and the empirical results of Duchin and Sosyura (2021) on the location preferences of executives who work from home. These…”

“…Recent theoretical work predicts that the large-scale adoption of remote work will shift migration patterns both intracity and intercity (Brueckner et al (2023), Davis et al (2023), and ). Empirically, survey data from Ozimek (2020) estimate that 14-23-million Americans planned on moving in response to the increase in remote work capabilities, with more than half moving more than 2 hours away.…”

“…One artifact of this shift is an expansion of viable places to live without changing jobs. Recent theoretical work predicts a relocation of households in response to the shift toward remote work that will impact the structure of cities and local economies (Brueckner, Kahn, and Lin (2023), Davis, Ghent, and Gregory (2023), and ).…”