In a world moving toward work from home, will the locations we valued yesterday be the ones we value tomorrow?

Whether you look at it from afar or up close, location has driven real estate values more than the other significant elements that make up a property’s value.

From a buyers perspective, location is the most crucial attribute because of its impact on commuting time and because a property’s location is permanent. Characteristics would also be considered mostly fixed, as few people actually change the size or function of a property fundamentally, by contrast to condition. Renovations are done repeatedly to most properties over their lifetime.

With all the things we considered unchangeable changing in 2020, is it possible that location won’t be the primary focus of most buyers?

Location may still be the foremost priority for buyers, but the same places will likely not be.

Here’s why:

1. Work from home, allowing people to live in the suburbs with high family support and low density.

2. Work from home requiring people to have more space to accommodate home offices.

3. Work from home, as the solution of choice for employers looking at economic hardship and approving budgets that are made to work due to lower commercial real estate costs.

The property you can often buy in the suburbs is 30-50% larger than what the same purchase price would acquire in some of the central neighbourhoods. The properties are also much newer in the majority, as cities build in generations along their perimeter like rings on a tree. Without the conflict of compounding the daily commute, won’t buyers leave the areas they moved to work?

A Leger survey conducted for RE/MAX’s Canadian Housing Market Outlook (2021) reported that 40 per cent of Canadians realized that their home needed renovations during the pandemic, and 29 per cent discovered that they need more space.

With only 6% of those surveyed replying that COVID-19 had directly compelled them to sell their property this year, there could be many Canadians waiting for enough certainty in their employment to make a move in 2021.

When we all “had to stay at home”, it required us to reconsider the value of being in the locations which we were supposed to be.

So the question is… Where is the tipping point? How many people don’t need to attend class at a university before the demand in the area falls below the supply, causing a market correction for its location?

What is we take the theory to a wider angle? How many people can do the things that need to be done in Toronto from Regina? Suppose that employers are restricted to the limitations of a reasonable commuting distance, and the cost of the average house is 10-15x the average household income. Wouldn’t it be useful to hire at a lower wage from an area where someone with the same skills can buy a house for only 4x the average household income?

Tim Ferriss wrote a book called “The Four Hour Work Week” in which he theorized that the “new rich” would seek to control their working location so they could move to places that would maximize their affordable experience— Like working in the U.S. but living in Thailand.

It appears as though we may be about to test the tolerance limits in our markets that struggle with affordability, and the second shoe to drop after the economic hardship caused by COVID-19 is a temporary change to work-from-home that is never going away.

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