During the housing boom in northern California 20 years ago, specifically the Bay Area, we rented a garden home, paying twice what we would’ve paid for a typical house payment in the Dallas-Fort Worth area.
This suburban garden home was also about 75 percent the size of the home we owned in D-FW. Every time we handed over the rent check, we daydreamed about what we’d do with the money if we could use it on a similar-sized home in D-FW.
Sigh. If only, we could’ve worked remotely.
Today, that dream of more affordable homeownership would’ve been very possible for us. According to an analysis recently released by Zillow, the ability to work and live from anywhere could open up homeownership to nearly 2 million renter households.
COVID-19, of course, played a big role in companies accelerating technologies for their workers to work from home. Already, companies in Silicon Valley are allowing workers to find homes in other markets.
It’s a positive for companies who can downside their large office spaces in cities. Judging by the results of the Zillow analysis, it’s a positive for workers as well, especially millennials who face challenges in getting their first starter homes.
It’s also a positive for the housing market, which, as the data points out, would bring an additional 2 million households, or 4.5 percent of all renter households, to the buying market.
“If remote work becomes a bona fide long-term option especially with the pandemic, that could reshape the U.S. housing market by opening up homeownership to people renting in expensive parts of the country,” Zillow economist Jeff Tucker says in the news release.
A previous Zillow report from the Harris Poll found that 66 percent of renters say they would consider moving if given the option to continue working from home, at least occasionally. Another study found that 43.6 percent of U.S. workers are in occupations in which teleworking is at least theoretically feasible.
In D-FW, Zillow finds that 33,333 renter households could likely work remotely and afford a typical starter home. That’s 3.2 percent of all renter households with the median age of these potential movers being 36.
In its report, Zillow analyzed renter households for whom monthly payments on a starter home in their metro are unaffordable, but would be affordable on the typical starter home. Then, those households were assigned a probability of being able to telecommute based on income, the worker’s industry, and occupation.
Tucker said proximity to work is one of the factors people consider when choosing where to live. Other factors might keep them from moving, including proximity to friends and relatives, cultural and natural amenities, and their children’s schools.
San Francisco-based tech companies, Twitter and Square, announced recently that some of its employees can work from home on a permanent basis. Facebook also says some of its workers might not have to return to its Menlo Park, Calif., offices although they might be faced with reduced compensation for not living in northern California. Facebook does plan to open new hubs, including one in Dallas, for mostly remote hires.
It makes the most sense in San Francisco. Zillow found that coastal metros such as San Francisco 22 percent of local renters would be able to leave the area and buy a home in a cheaper area if remote working were an option.
The National Association of Realtors (NAR) estimates that, based on a $50,305 annual income, a median-priced home with a 20 percent down payment would cost $898 based on an interest rate of 2.625 percent. In San Francisco, Zillow’s rental report estimates that a typical starter home runs $5,181 a month.
All this came 20 years too late for us, but it’s good news for potential homeowners looking at D-FW.