How the Great Resignation is Changing the Real Estate Market

When the world entered into an unprecedented pandemic, no one suspected just how much of an impact lockdown would have on the workplace or real estate. Who would have guessed that work-from-home jobs would be here to stay or that people would start moving away from city centers? The Great Resignation has changed the way we work and the way we live, potentially for forever, and that means big changes are ahead for REITs and other real estate investments.

The Benefits of Working from Home

Working from home showed people with traditional office jobs can be just as effective, if not moreso, without a cubicle or a corner office. The pandemic reinforced the importance of being home when kids get home from school and eliminated the hassle of the morning commute. As a result, people decided they didn’t want to go back to the office. There didn’t seem to be much sense in traveling to a busy office to do a job that can be completed from the comfort of the couch while keeping an eye on little ones or getting the occasional cuddle from the family pet. Thus, the Great Resignation was born, and workers today simply want more from their lives and their jobs.

Worker Shortages Provide Leverage

During the Great Resignation, workers have begun to gain more leverage with current and future employers. Worker shortages mean companies are no longer able to offer low wages and minimal benefits without losing staff. This means people are demanding paid time off, flexible schedules, better insurance coverage, and the option to continue working from home. Even unions have seen a resurgence as a result of the changing face of the national workforce, helping secure better hours and pay. The current labor shortage has impacted nearly every sector, from service industries and blue collar jobs to corporate office jobs. Those with the ability to work from home who make remote work a contingency for employment now have the freedom to move where they want, and that’s exactly what’s happened in the post-pandemic world.

A Migration to Smaller Communities

As people became less tied to their jobs geographically due to a lack of commute, some started looking for new homes or apartments. This led to more workers moving to emerging markets. Large cities, such as San Francisco, Chicago, and Houston, saw declines in population throughout the pandemic, while San Antonio, Phoenix, Las Vegas, and other smaller cities saw an increase in population growth. There are many reasons for this shift away from big metropolitan areas, but some of the most critical include:

  • Cost of housing
  • Better/less crowded communities
  • Warmer weather

Not everyone moved across the country; some chose to move to the suburbs or exurbs. Exurbs are essentially emerging markets that lie on the edges of more densely populated suburbs, which typically have lower population densities and potentially more affordable housing options. The ultimate goal, regardless of where remote workers moved, was to seek a better, more fulfilling way of life in a new community.

What the Great Resignation Means for Real Estate Investing

The shift from working in the office to working from home has had some surprising effects for REITs and other real estate investment options. Transitions away from large metropolitan areas to emerging markets give REITs unique opportunities to invest in assets, such as multifamily rental properties, that are growing in demand. By investing in these smaller communities where remote workers want to move, value-add real estate growth plans like DiversyFund can diversify their holdings and provide individual investors with a way to build their portfolios and hedge against inflation. Higher demand for rentals means lower vacancy rates and potentially stable cash flow for assets, which may in turn provide better returns for investors.

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