What a difference a day per week could make.

Stick with me a moment here. If your customer’s hybrid home-office set-up is three days in the office and two at home, what’s the time and distance he or she will tolerate for a commute?

If reality turns out to be four days in the office and one either at home or elsewhere, it’s a shorter leash, no?

Like images in your vehicle’s side view mirror, nearer-term opportunity to kick-start new home sales demand may be closer [in] that it seems.

The future of hybrid and remote work may have arrived ahead of schedule, thanks to COVID-19, but it’s not as pretty, buttoned-up, or the sure bet many in residential real estate investment and development are making it out to be.

For builders and residential developers, this dilemma complicates an already-tricky next 12 to 24 months in terms of where to focus resources, how to price, what products with which densities to lean on in an effort to re-ignite homebuyer excitement and momentum.

On the one hand, it should be clear as a strategic pathway and motivating as a priority focus area to wire together millennial households, affordability, and a two-off-three-on hybrid-home-office as a bet-able land and community development scenario for the near-future.

The case-in-favor for doubling down on that alignment – seen through the lens of consumer household motivators and some economic benefits to employers – is strong.

  • Millennials are still forming families and households, and, largely, still in apartments
  • Source: Core Logic

    The big exodus, says Malone, has begun to peter out.

    It is possible that the preference for remote living that the pandemic caused is beginning to fade.”

    Malone takes care to note that migration and mobility trends that preceded the pandemic era – including a slow rise in remote work, a migration to Sun Belt metros, a magnetic pull of affordability, etc. – are still chugging along and may continue to support some of the manifest destiny expansion of residential markets in the past 24 months.

    Here’s Malone’s wrap-up:

    The preference for more far-flung locations may not have changed. Home prices increased at all-time levels between 2018 and 2022. This may mean that preferences for large suburban and exurban homes still exist but that many buyers can’t afford such properties and must choose smaller homes closer to urban centers.

    Furthermore, the timing of migration from dense areas dovetails with a rise in first-time homebuyer activity. It is very possible that many Americans bought suburban homes, given that they knew interest rates were as low as they might ever be, and thus made the move to outward-lying areas that many people make as they age. If this is true, we would expect to see an absence of younger, first-time homebuyers in the next few years who reorient purchase patterns closer to downtown areas.

    The X-factor here, and one that builders and developers navigating an especially treacherous demand outlook in the next year or two, comes in two big questions. One, is will the Great Resignation flip into the Great Termination, in which case employers who are struggling to find talent today may have far deeper pools of candidates in fairly short order?

    The other is the actual end-game for Remote Work as it settles out over a longer stretch of years. Will it be one-day per week at home or away? Or two? Or more?

    It’s a little early for builders and developers to bet that employees – while they’d benefit for both affordability and quality of life with a 3-day workweek in the office – will wind up with that kind of sway.

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