Work From Home Inflationary BOOM?
Housing-Market / UK Housing Jul 10, 2022 - 07:14 PM GMTBy: Nadeem_Walayat
The pandemic has resulted in many tens of millions more americans working from home. As someone who has been working form home for a good 15 years I can well understand why house prices have rocketed higher as prospective home buyers both seek out properties that are better suited to working from home, more suburban, quiet office spaces, plenty of storage, or view properties with scope to being upgraded into work from home environments.
And then we have the demand for home working tech where demand has soared through the roof during 2020 and looks set to continue into the END OF 2021. Which is why I went on a personal spending spree upgrading virtually whole of my home tech whenever the opportunity presented itself i.e. Prime Day, Black Friday and Cyber Monday of which Black Friday turned out to present the best value for money discounts.
Where upgrading your homes and tech for home working is concerned then the key thing is to act sooner rather than later as there is a GREAT DEAL OF inflation in the pipeline for home working technology i.e. computers, DELAYING purchases in the hopes of price drops IS NOT GOING TO WORK. If you need a new computer then bite the bullet and buy it now because prices look set to increase during 2021! Which is something that the tech reporters don't realise as they scratch their heads and keep suggesting that stock and prices will soon start to normalise which is usually what one expects tech to do i.e. get cheaper over time. Instead the likes of the Ryzen 5000 processors and and RTX 3000 series GPU's rather than falling in price will INCREASE in price because we are in an inflationary working from home BOOM!
So make lists of what you need to efficiently work from home and then go and buy it ASAP because prices are going to go much higher during 2021!
Where the housing markets are concerned then it should not be so surprising that house prices have gone up when the consensus expectations were that they would fall, and will go up further for many homes are now also part commercial office space and thus price rises are reflecting that added value, and at some point we will probably see governments attempt to levy extra taxes onto home workers, perhaps during 2022. Conversely commercial real estate especially office space is going to experience more pain during 2021 which perhaps could present opportunities to pick up some cheap commercial office space for those seeking to expand out of their home offices.
UPDATE
The big question is if the Work from Home Boom is over? After all I have bought nothing of significance since March 2021 in terms of maximising working from home, though by design I have engineered working form home since 2012 when I bought my present home with being able to work from home in mind which I am sure continues to be driver for many would be home buyers as they seek out properties that are well suited for working from home to the detriment of office space.
Therefore if economic contraction of sorts is expected or materialises many will view that as an opportunity to move up the housing ladder with work from home in mind and thus be prepared to pay more for a house than they would if they were just seeking a home to live in , i.e. a home that generates revenues cannot be valued on the same basis as what economists still to this day rely on. So technically most UK home homes are a LOT cheaper than the metrics imply them to be something academics will come back to many years from now to explain why house prices continued to rise due to many more people choosing to work from home.
As for me I am eyeing an office space slump as an opportunity to add an office building to my existing portfolio of 2 properties. Though as with everything it all depends on price, for instance, 1 property I was looking at back in Sept\ember 2021 which appeared to be reasonably priced at £550k, soon shot higher on interest to £725,000, currently perched on £695,00 as they sellers being an estate agency decided to ramp up the price on buyer interest. So I can see from first hand experience just how difficult it is to buy a property in the UK in this climate because there is no such thing as a cheap property. All one can do is do the sums with a view to dual use work from home built in. Bring on the recession so I can snap this up for about £550k.
Work from home is the new normal.
This article is part of a series based on my extensive analysis of that concludes in a detailed trend forecast for UK house prices -
UK House Prices Trend Forecast 2022 to 2025
THE INFLATION MEGA-TREND
WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING
High Inflation Forecast for Whole of this Decade Due to Rampant Money Printing
Fed Inflation Strategy Revealed
Russian Sanctions Stagflation Driver
RECESSION RISKS 2023
UK Debt Inflation Smoking Gun
Britains' Hyper Housing Market
UK Population Growth Forecast 2010 to 2030
UK House Building and Population Growth Analysis
UK Over Crowding Ratio
Overcrowding Implications for UK House Prices
UK Housing Market Affordability
UK House Prices Real Terms Sustainable Trend
UK House Prices Relative to GDP Growth
UK House Prices Momentum Forecast
UK House Prices and the Inflation Mega-trend
Lets Get Jiggy With UK INTEREST RATES
Is the US Yield Curve Inversion Broken?
UK house Prices and Yield Curve Inversions
Interest Rates How High WIll they Go?
Work From Home Inflationary BOOM?
Formulating a UK House Prices Forecast
UK House Prices 2022 to 2025 Trend Forecast Conclusion
Peering into the Mists of TIme
Risks to the Forecasts
US House Prices Trend Forecast 2022-2024
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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