How WFH worsened the housing shortage
The work-from-home revolution caused a significant quantity of workspace to move into residential neighborhoods. That alone is enough to significantly raise demand for housing.
Why it matters: The flip side of empty offices is fuller homes, and people demanding space to work. Often, that means they want an extra room.
The big picture: There was a severe housing shortage even going into the pandemic. When housing doubles as office space, that only exacerbates the crisis.
By the numbers: Take New York City as an example. If you look at square feet per resident and per employee in the Big Apple, the average New York household fits about 2.5 people into about 1,000 square feet. If one of those people has access to an external office, that provides another 150 square feet of space for working in.
- When that person works from home, the household is going to feel more cramped than usual unless it expands by about 150 square feet. If the family demands 150 more square feet, that's a substantial increase in demand, at 15%.
- It's no coincidence that new apartments built after the pandemic hit were 10% larger than new apartments built in the previous 10 years, per real estate services firm CBRE.
Between the lines: Suburban homes are subject to the same dynamics. Someone who wants a home office wants a room with a window and a door that closes so no one can hear their Zoom calls.
- In the housing industry, that's known as a "bedroom" — which means that adding workspace to a home effectively means going up an entire rung on the property ladder by adding an extra bedroom.
The bottom line: In the early days of the pandemic we spent a lot of time at home involuntarily. Today, we're doing the same thing voluntarily. Either way, that means we want more space.
Go deeper: Axios' Felix Salmon reports on this and more in his new book, "The Phoenix Economy."