Have real estate prices in Colorado changed due to the increasing number of remote workers? Remote work has dramatically transformed over the last few years and altered many Colorado workplaces. According to Census data, the proportion and total number of workers who work from home more than tripled between 2019 and 2021. While many have benefited from this, the real estate market has also been impacted.
In this post, we’ll discuss the relationship between remote working and the real estate market. We’ll also examine how remote working has affected the Colorado real estate market, including the price predictions for 2024.
Relationship Between Remote Working and Real Estate
Working from home gained popularity during the COVID-19 pandemic. Many companies asked their staff to work from home (WFH) or temporarily suspended operations during the pandemic. As things are getting back on track, some businesses have placed orders for return-to-office, while others are carrying on with WFH.
The real estate industry is directly impacted by remote working. During the pandemic, a lot of people have relocated to places or cities with minimal restrictions. Individuals are choosing to live a more tranquil lifestyle instead of commuting to their workplace.
They may be able to afford bigger, more roomy homes than those found in cities. The demand for real estate in these locations has shifted as a result of the migration, driving up real estate prices.
- Residential Real Estate -— The rise of remote work has increased demand for housing and properties with features conducive to remote working, such as dedicated home office spaces, larger living areas, outdoor spaces, and access to reliable internet.
- Commercial Real Estate —- Remote work has also impacted the commercial real estate market, particularly in urban areas where office space demand has decreased.
Real Estate Prices Prediction in Colorado for 2024
According to a Redfin report in December 2023, the average median home price in Colorado is $584,200, up by 5.9% year-over-year. However, experts predict the median sale price of residential real estate will increase due to tight inventory in 2024.
For commercial real estate properties, 2024 will be difficult because many purchases will no longer make sense due to the continued high interest rates. Additionally, it will take some time to adjust due to the oversupply in specific property categories, such as offices, flats, and industrial spaces.
- Office —- A space will suffer from price reductions of roughly 10–20%, while B/C space will be completely destroyed as vacancies rise and rents are unable to keep up with rising cap rates. Watch for a 20–30% drop in the cost of B/C office space, signaling the bottom of the market.
- Multifamily —- When cap rates rise and rents stagnate, this industry will also suffer. Contrary to popular belief, B/C apartments will do better because there is a greater demand for rentals at lower price points. In Colorado, overall, apartments will face challenges, but they will fare better than offices.
- Industrial —– As consumer purchasing habits change and storage and distribution slow down, this industry will stand still in 2024. Working through the vast amounts of space could take several years, which will put pressure on new rentals. But in the near run, expect some significant resets in rents, vacancies, and prices.
- Retail — Class A stores will prosper as most of them have long-term leases, but big box and lower-tier stores will struggle as customers stick to their usual purchasing habits and reduce the number of products they buy. Additionally, growing salaries will drive up the cost of in-person retail and compel a shift to online sales, particularly in the lower-tier areas.
How Remote Working Affects Real Estate Prices in Colorado
Remote working can have both positive and negative effects on real estate values, and the impact can vary depending on various factors such as location, property type, and market dynamics. While some areas in Colorado may see an increase in property values due to increased demand from remote workers, others may experience declines, particularly if they rely heavily on industries that are negatively impacted by remote work trends.
Here are some ways remote working can affect real estate values:
Shift in Demand
Remote working has led to a shift in housing demand away from city centers and into suburban or rural areas. Workers no longer need to live close to their offices, leading to increased demand for larger homes with more space and amenities, such as home offices and outdoor areas.
Urban-to-Suburban Migration
Many people are choosing to move out of densely populated urban areas to suburbs or smaller towns, seeking more space, lower costs of living, and better quality of life. This increased demand in suburban areas can drive up real estate prices.
Impact on Commercial Real Estate
Remote working has also affected commercial real estate values, particularly in urban areas where office space demand has decreased. This can lead to lower property values for commercial buildings, especially if there is high vacancy rates.
Rise in Vacation or Second Homes
With remote work becoming more common, some individuals are opting for vacation homes or second homes in desirable locations where they can work remotely part-time or full-time. This increased demand can drive up real estate prices in these areas.
Local Economies
If businesses downsize or close offices due to remote work, it can lead to job losses and decreased demand for local goods and services, which may, in turn, affect real estate values.
Frequently Asked Questions
How has remote work impacted urban real estate prices?
Remote work has led to a decrease in demand for urban properties as people seek more space and affordability in suburban or rural areas. This shift has generally resulted in stagnating or declining real estate prices in many urban centers.
What types of properties are in high demand due to remote work?
Properties with dedicated home office spaces, larger living areas, outdoor spaces, and access to reliable internet are in high demand. Single-family homes, townhouses, and properties in suburban or rural settings are particularly sought after.
How has remote work affected the commercial real estate market?
Remote work has led to a decrease in demand for office space in urban areas, resulting in lower occupancy rates and declining prices for commercial properties such as office buildings and retail spaces. Conversely, demand for flexible workspaces and mixed-use developments may see an uptick in certain locations.
What should homebuyers consider when searching for a property suitable for remote work?
Homebuyers should prioritize properties with features conducive to remote work, such as a dedicated home office space, high-speed internet access, natural light, and good sound insulation. Additionally, it is important to consider the neighborhood’s amenities, proximity to essential services, and potential for future resale value.
Conclusion
The pandemic marked a significant shift in the remote labor trend. There is a direct correlation between real estate and remote working. Remote working has impacted the real estate prices in Colorado.
If you are looking for the latest information on investment properties and market trends, our certified real estate broker can help you with your investment choices. Whether you are looking to buy a property or searching for a home with a designated workspace, feel free to contact us.
