Renters at the Tipping Point of Homeownership: Estimating the Impact of Telework

Treh Manhertz
Alexandra Lee
Zillow Group Economic Research

The COVID-19 pandemic necessitated a large-scale shift toward working from home, leading to a sea change in the level of remote work likely to continue after the pandemic. Previous research has quantified the importance of home location relative to work location (for example, Kneebone and Holmes, 2015), but to date, little work has been done to show the potential impact of an unwinding of that relationship. This analysis quantifies how many renter households could potentially take advantage of teleworking to buy a home. These renter households at the “tipping point” of homeownership are identified using income, industries, and occupations from the 2018 American Community Survey (ACS) rates of teleworking potential from a Bureau of Labor Statistics (BLS) analysis of the American Time Use Survey 2017–2018 (ATUS) and the Zillow Home Value Index (ZHVI) for the lower third of home values in the for-sale market. This analysis finds that 1.92 million U.S. renter households are on the telework tipping point for homeownership. The highest rates of tipping point households are found in expensive west coast markets. For example, more than one-fourth (25.2 percent) of renter households in San Jose could theoretically afford to buy a home in a less pricey locale if they were able to take advantage of more permanent work-from-home policies. In a few metropolitan areas with an extra-expensive principal city, a sizable share of renter households would have an additional incentive to move to the suburbs—up to 10.4 percent of renter households in the city of San Francisco. Nationwide, Asian renter households have the highest share at the tipping point (9.0 percent), followed by Latinx (5.0 percent), White (4.1 percent), and Black (3.7 percent) renter households. This finding means that the Asian homeownership rate is most likely to have observable increases due to telework. Across metropolitan areas, Black renter households are typically more likely to be at the tipping point (29.0 percent more likely than other racial groups), and Latinx renter households are far less likely (26.2 percent less likely than other racial groups).