As the COVID-19 pandemic shut down the U.S. economy, many companies were unprepared for everyone to be working from home overnight, leaving them scrambling to set up remote procedures. “More than half of the people who were forced to work from home overnight had never done it before with any regularity,” says Kate Lister, president of Global Workplace Analytics, a research consultancy. In fact, only 20% of employees were working from home before COVID-19.
When the pandemic hit, both companies and workers were thrust into an unprecedented situation in which they had to quickly figure out which tools they needed, both hard and soft; what space they required; and how to manage their workflow. Some of that included sending laptops to employees, arranging for Zoom and Slack tutorials, setting up virtual private network (VPN) systems, and ensuring that workers had the mental support required to succeed in the new normal.
All of a sudden, any boundaries between work and personal life went out the window. People were working from wherever they could find spare space in their house or apartment, while parents added juggling virtual school and childcare at the same time. As time went on, some of those issues became more manageable, but it was still a major adjustment. About half of those surveyed by Pew Research in October 2020 said they liked the flexibility and the ability to manage their own hours, while 65% said they missed interacting with colleagues in person.
A big upside for companies that had previously been wary of remote work having an adverse impact on productivity was the positive effect on their bottom line. In fact, 83% of those surveyed by PwC said remote work has been a success. Still, no one expected it to last this long. Now that infections are down, vaccinations are up, and lockdown restrictions are being loosened, companies are beginning to evaluate whether or not they want to return to their offices. And if they do want to return, what does that look like? Will it be full time or hybrid? And what pandemic safety protocols will remain?
- Companies and employees showed remarkable resilience by quickly figuring out how to cobble together remote work operations.
- Working from home did not hurt productivity; 83% of those surveyed by PwC called remote work a success.
- As infection rates drop and the economy reopens, companies are evaluating their plans for remote work.
- Some companies want everyone back, but most are looking at hybrid or remote-by-choice options.
- Companies are also evaluating their office-space needs.
- Housing inventory dried up as a result of remote work, as many employees looked for more space.
- Home prices are expected to remain high, with inventory remaining tight into the the third quarter.
- Experts predict the housing market to begin easing by the end of 2021.
Reimagining the Workplace
Some companies are planning to remain remote for the foreseeable future, some are considering a hybrid approach, while others want workers back full time. Goldman Sachs (GS) is trying to get workers back in the office sometime in June, while JPMorgan Chase(JPM) , Citigroup (C), and Bank of America (BAC) have all said they plan on asking at least some percentage of workers to return throughout the summer, according to reports from The New York Times and The Washington Post. On the flip side, tech firms such as Twitter (TWTR), Slack (WORK) and Square (SQ) have said they expect to remain remote-first for the foreseeable future, while Facebook (FB), Netflix (NFLX), LinkedIn, and Google (GOOGL) are planning on, or have started, partial reopening.
Meanwhile, Microsoft (MSFT) has created a Hybrid Workplace Dial that breaks down the level of its office occupancy into six stages based on local health conditions and government guidance. A lot depends on how much the country gets the pandemic under control. Ford (F), for example, recently pushed back its plans to start bringing back some workers to October from July due to a surge in COVID-19 cases in Michigan.
Workers aren’t exactly clamoring to get back to the office. While 75% of executives would like to see their employees return by July, only 61% of workers anticipate spending half their time in the office by then. With hybrid models becoming the most popular, companies are also reevaluating their office-space needs. While many executives say they are planning to consolidate office space or look at opening more satellite locations, 56% are considering adding more office space over the next few years, signaling a desire to get more workers into the office.
One thing that stands out is that companies seem to be taking a longer view. LinkedIn recently created a new internal position—VP of Flex Work—to address how the “workplace of the future” might look. “It's a super interesting challenge to solve, challenging us all to think creatively, make careful decisions and collaborate more effectively,” posted Shannon Hardy, who has taken the job.
Working From Home Created a Housing Bubble. Will it Last?
Another side effect of the working-from-home migration is its impact on the housing market. Two things happened when remote work became the norm. Some people quickly realized they needed more space, so they rushed to buy a new home. Others realized they could work from anywhere, which prompted some workers to move closer to family members who often lived in different parts of the country. With everyone working from home, it didn’t matter where you were.
According to a recent report from Zillow (Z), the trend toward working from home, at least part time, is here to stay. That will likely keep the housing market heated for the near term, especially as interest rates remain at attractively low levels. The latest statistics from real estate brokerage Redfin back that up: During the four-week period ended May 2, 2021, home prices were up 21% from a year ago, with new listings spending a record low of 19 days on the market, and 48% selling above asking price.
Many realtors have advised would-be buyers to have all of their approval paperwork in order and be ready to make an offer on the spot or risk losing their dream home. Housing inventory is sitting at 30% less than a year ago, and prices are expected to increase by 6.2% this year. Don’t expect new-home building to come to the rescue. Soaring lumber prices have added $36,000 to the price of new single-family homes, according to an analysis by the National Association of Home Builders.
Still, there is some good news on the horizon for buyers. An expected increase in existing home sales should help alleviate some of the supply drought by the end of the year and into 2022. Also, price increases in other parts of the economy may lead some would-be homebuyers to put the brakes on their plans as they adjust their spending behavior. “As states lift their pandemic restrictions, we will likely see more shortages and price increases on everything from gasoline to hotel stays and food,” Redfin Chief Economist Daryl Fairweather noted in a statement. “These price increases will likely be short-lived but could cut into home buyers’ budgets and ease competition enough for the housing market to become more balanced.”