A trio of new studies confirms that Work From Home (WFH) is not a passing trend, but “a permanent shift” in how and where Americans are working.^{1 2 3} Such a shift has significant implications not just for real estate, but for migration trends and the fiscal health of municipal and state governments.

First, the facts. WFH adoption stabilized in the U.S. by 2023, and from then through now 25% of all paid workdays for Americans aged 20 to 64 were WFH, with 15% of workers being fully remote. Education is the biggest predictor: “College and graduate degree-holders have WFH rates 15 percentage points greater” than workers with high school degrees. Gender differences exist but are secondary to education level.

This data is from a working paper called “Measuring Work From Home,” which, although not a riveting title, goes to this being a hard number to figure out, which these researchers did by methodologically aligning the leading WFH surveys with census data and combining that with their own fieldwork. The result is a robust statistical baseline for understanding the scale and persistence of remote work in the U.S. economy.

Their study also helps predict what’s going to happen. Although work-from-home rates have quadrupled since 2019, people still want more. On average employees desire a 40-50% WFH schedule, double today’s level. The desire for more work-from-home time is felt broadly throughout the workforce but interest is especially strong from the same groups that work from home now: people with college degrees, women, workers who live with children and those with longer commutes. These cohorts will continue to exert upward pressure on work from home going forward, reinforcing the structural nature of this shift.

The historically elevated work-from-home rates have significant implications for the labor markets, particularly in Finance, Information and Professional Services. For people that work in WFH-eligible roles, geographic barriers to employment are eroding - you can work from a company that’s based anywhere. People that work from home also can physically relocate more freely, which is especially helpful for working couples and those aspiring to live in lower-cost locations. Finally, employers seeking talent are unconstrained by a geographically local talent pool.

These observations are from “The New Geography of Labor Markets,” one of the first work-from-home-focused papers we’ve seen that accepts WFH as permanent and examines its second-order effects on labor mobility, talent allocation, and regional competitiveness.

The researchers started by studying changes in how far employees live from their employer worksites: That figure was 15 miles on average in 2019, by 2023 it was 26. In 2019 less than 4% of employees lived more than 50 miles from their employer’s worksite, by 2023 it was 9%, and for employees hired after March 2020 the rate was 12%.

Who are these people? Unlike the prior study, this one looked at income (which correlates to education) and found well-paid employees are driving this trend - in 2019 6% of employees making more than $250,000 lived more than 50 miles from their worksite, by 2023 that was 15%. And the work people do matters. Twenty percent of employees in Professional & Business Services, and 30% in the Information sector work remotely. Other sectors like Food Service, Hospitality, Healthcare, Retail have work-from-home rates in the 2% to 5% range.

The financial incentives for remote employees are substantial. The researchers looked at workers who stay with the same employer and found “a pattern of net migration to states with lower top marginal tax rates and to areas with lower housing costs.” These migration rates increase with earnings and have intensified after the pandemic.

Highly paid employees that stayed with one employer but relocated reduced their marginal state tax rate by an average of 5.2 percentage points. That’s a lot and it’s great for the employees and for in-migration hubs like “zoom towns,” but painful for local municipalities that lose high-earning tax payers.

So many employees making more than $250,000 a year who stayed with the same employer moved from high- to low-tax states that it lowered total 2023 total state-level income tax collection by $25 billion. Including other income brackets and job-changers, the authors estimate the total loss in state tax revenue from work-from-home migration was $40 to $50 billion (!), which is in the 7-8% range of total state collections.

Another work-from-home relocate benefit: Employees earning more than $150,000 who moved to a new zip code in 2020 spent less on shelter too, seeing a 16% reduction in local housing costs, on average.

Of note, before the pandemic, cross-state migration rates for these “continuing employees” was near zero. A step-change began in 2020 and has continued since then. Similarly, migration to lower-housing-cost markets for these employees was very low prior to the pandemic but spiked during 2020 and has continued.

The net result: highly educated, highly paid employees that can work from home are seeing huge benefits when they do, and they want more. That pressure is driving outmigration for “cities with high housing costs that are situated in high-tax states.” For these cities there are concentrated, negative implications on real estate fundamentals, especially for CBDs.

Focusing on the office sector: We know Class A+ urban office is performing well, while work-from-home is disproportionately affecting Class B and C properties, many of which face obsolescence and risk becoming “stranded assets.” The work-from-home ramifications for affected buildings are two-fold: 1) loss of cash flow as tenants contract or vacate, and; 2) increase in the market cap rate given higher risk in the future cash flows. So what is an office building worth now and what will it be worth going forward in light of persistent structural headwinds?

Valuation estimates come from a study called “Work From Home and the Office Real Estate Apocalypse,” which wins for today’s best paper title and in which the authors wrestled with the low office transaction volume since 2020 by creating a novel asset pricing model to infer valuations. Critically, the model imagined the work-from-home demand loss to be permanent and had a primary focus on New York City, by far the largest U.S. office market. They predict that office in the Big Apple will lose about 46% of its 2019 value by 2030, most of which has already been erased. Here’s how the office market in each major U.S. city fared as of December 2023 compared to December 2019.

We already knew the office market was in trouble, of course, but the popularity and drivers of work-from-home described above suggest the likelihood of a full recovery is improbable, and also lend credence to the magnitude of the value reduction estimates indicated in that table. We are old enough to be “used to” office as a large institutional asset class, and used to the corollary benefits to local retail businesses and cities with thriving office markets, so a structural shift is hard to internalize, but we (and you) need to. That’s one reason we wrote this, frankly.

There are many investment takeaways from these findings, but the big ones for the Haystack were pretty clear. First, with work-from-home rates now entrenched, the risk profile in any potential office acquisition has fundamentally changed; you knew that already.

WFH should be an explicit risk factor investors seriously consider if making a play in high-tax states and especially in cities with concentrations of WFH-eligible jobs, notably New York City and San Francisco. These cities are losing office workers and losing highly paid residents and more importantly, that’s likely to continue. On the flip side, work-from-home is an upside risk factor for investments in desirable, low-cost/low-tax locations, as they will see increasing attention from relocating, highly paid and highly educated work-from-home employees.

The Rake

Three good articles.

• Class A Occupancy Hits Two-Year High, But Class B Still Leads - CRE Daily

  Class A multifamily occupancy rebounded to a two-year high of 95.7% in May 2025, yet still trails Class B, which leads the sector as supply pressures and affordability dynamics continue to favor mid-tier assets.

• Only Six Major Markets Managed Consistent Positive New Lease Trade-out Since 2023 - RealPage

  Despite a national downturn in rent growth, a subset of U.S. apartment markets managed to maintain positive rent trade-outs throughout the recent supply surge.

• Invesco Predicts CRE Value Gains After Deep Dive into Fed Lending Survey Data - GlobeSt.

  Invesco’s analysis of the April 2025 Fed lending survey points to likely CRE value gains ahead, as lender standards ease and historical patterns signal single-digit annual appreciation—supporting a cautiously optimistic outlook for investors.

The Harvesters

Someone making real estate interesting. They don't pay us for this, unfortunately.

 Who: Groma

What: A tech-forward real estate investment platform focused on small-format multifamily in Boston. Groma launched GromaREIT under a Reg D offering (and has an active UPREIT) and owns more than 50 assets so far. It also manages the assets and just introduced Grobot, an AI-driven property management system for owners of small-format multifamily.

The Sparkle: Many have tried and failed to aggregate small apartment assets but it’s hard to do at scale given the natural inefficiencies of a distributed portfolio. Groma understands that, has in-sourced operations and made it the company’s core competency. They are especially taking aim at the “25% of rental costs that are answering questions and fixing stuff.” Can’t knock the Groma hustle.

From the Back Forty

A little of what’s out there.

If you’ve ever wanted to see a thoughtful breakdown of a great comedy routine - how it’s structured, why it works - the Pudding did one featuring Ali Wong. This is very funny and insightful but isn’t safe for work.

Link: https://pudding.cool/2018/02/stand-up/

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1  Buckman, Shelby and Barrero, Jose Maria and Bloom, Nicholas and Davis, Steven, Measuring Work from Home (February 2025). NBER Working Paper No. w33508, Available at SSRN: https://ssrn.com/abstract=5150897.

2  Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, Work From Home and the Office Real Estate Apocalypse (January 23, 2025). forthcoming American Economic Review, Available at SSRN: https://ssrn.com/abstract=4124698 or http://dx.doi.org/10.2139/ssrn.4124698

3  Mert Akan & Jose Maria Barrero & Nicholas Bloom & Thomas Bowen & Shelby R. Buckman & Steven J. Davis & Hyoseul Kim, 2025. "The New Geography of Labor Markets," NBER Working Papers 33582, National Bureau of Economic Research, Inc.]