Remote work ramped up prices. Now what?

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A Tale of Two Post-Covid Cities

As employees return to the office, Bend, Ore., may see a crash.

By Brandon Hollihan, WSJ

May 2, 2024 5:13 pm ET

Bend, Ore., about three hours southeast of Portland, is an up-and-coming city and wonderland for skiing, hiking and water sports. As soon as Covid lockdowns began, many Portlanders and even San Franciscans decided to turn a weekend escape into full-time life. Between 2020 and 2022, according to Census data, Bend’s population increased from about 99,000 to 103,000, and continued growth is expected this year. Similar patterns of migration happened across the U.S.

This population influx dramatically altered Bend’s housing market. Between March 2020 and March 2022, the median house price surged from about $460,000 to $740,000. During that period, the average time a house stayed on the market fell from 74 days to four.

Tampa, Fla., is another city that saw this trend. Between 2020 and 2022, Tampa’s population increased from about 385,000 to 398,000. The median home price between March 2020 and March 2022 rose from $268,000 to $372,000. But while Bend and Tampa have faced similar housing price jumps, the cities’ population influxes have been different in a few key ways.

First, about 74% of those looking for work in Bend want remote-friendly positions, according to a LinkedIn report. By contrast, about 30% of those applying for jobs in Tampa want remote work. This may be because Tampa has more high-paying in-person jobs than Bend, where the schools and healthcare industry are the major employers. As companies across the U.S. require more employees to return to the office, it’s possible that most homeowners in Tampa will be able to stay put while many in Bend will need to move.

Secondly, Bend is pricier. Its current $735,000 median home price is well above both Tampa’s median of $423,000 and the national median of $420,000. Fewer prospective home buyers can afford to pay Bend prices should owners need to sell because they no longer can work remotely. What will happen if many Bend residents have to relocate at the same time? Either a lot of rentals will hit the market or a buyer’s market is on Bend’s horizon.

Third, Tampa is a larger city, with about 171,000 homes in total to Bend’s 44,000. Each person’s decision to sell or hold onto a house in Tampa has a smaller effect on the overall market than in Bend. A thousand people sell in Tampa? No big deal. Same happens in Bend? That’s 2% of the total stock.

Contrasting these cities—both of which benefited from pandemic-related population influxes—reveals that as workers return to the office, the effects will vary in different places. In cities similar to Bend, we can expect residential volumes and home prices to drop eventually. Businesses that grew based on these entrants will struggle. By contrast, cities such as Tampa, Austin, Texas, Nashville, Tenn., and Phoenix are poised to keep growing because of factors unrelated to the pandemic. Even if most employees return to the office, those cities will keep drawing home buyers fleeing costly, crime-ridden, high-tax cities.

Mr. Hollihan is a commercial real estate specialist.