Real estate is inherently local, with property values closely tied to the economic drivers and characteristics of specific regions. While understanding the national home price forecast for 2025 provides important context, savvy investors should focus on identifying cities and regions with strong growth potential. After all, market efficiency is just as important as generating returns.
Another compelling area to watch is cities experiencing a high percentage of workers returning to the office. As of 2020, millions of workers have reaped the benefits of work-from-home policies, but there are growing signs that the trend is reversing.
As more and more companies move toward office space, cities with strong office-based economies and rising reoccupation rates could see increased demand for housing. This change may lead to an increase in property prices in these areas as workers move closer to their offices and revitalize urban centers.
Investing in Back-to-Office Cities
Similar to “closer cities” like Boise, Idaho, which flourished during the remote work boom, cities that see a return to office work are likely to experience increased housing demand. While most workers prefer flexibility, companies looking to return to the office will drive demand in urban areas.
Recent data shows big drops full-time remote workers in municipal areas such as:
- San Jose-Sunnyvale-Santa Clara (35% fully remote to 16% by 2023 and down)
- San Francisco-Oakland-Berkeley (35% -> 21%)
- New York-Newark-Jersey City (23% -> 14%)
- Boston-Cambridge-Newton (27% -> 18%)
- Seattle-Tacoma-Bellevue (31% -> 20%)
- Los Angeles-Long Beach-Anaheim (21% -> 15%)
- Washington, DC-Arlington (33% -> 22%)
Check out this comprehensive chart put together by Lance Lampert, author of the ResiClub newsletter.
A Common Theme Among Cities With Biggest Back-to-Office Transitions
A key feature of cities experiencing the strongest return to office conditions is their difficulty in adding new housing. Years of supply shortages have made these cities more competitive, potentially leading to bidding wars that drive up both rental and property prices. As more workers return, demand will increase in both residential and commercial areas, making these cities the most popular places to live.
The revolution will not create an immediate boom. Initially, existing inventory will be taken as the movers and office tenants adjust to the changes. However, if return-to-office trends stabilize, pressure on the limited housing stock is expected to increase prices. The combination of strict land use regulations and low loan-to-value ratios amplifies this effect.
Take San Francisco for example. Building new homes is very difficult due to strict regulations and high construction costs. Obtaining a building permit often takes years, assuming the property is zoned for development. Then you have to build a darn building! I tried to get an ADU permit in the past and gave up after six months.
As technology companies develop and implement hybrid work policies that require at least three days away from the office, the demand for housing is increasing in technology areas such as San Francisco, San Jose, and surrounding areas.
A sustained bull market spurs significant wealth creation, not only attracting more workers to these areas but also channeling more corporate equity capital into real estate investments. The only way to truly enjoy the benefits of your stock is to use it to buy something meaningful or fulfilling. This dual effect—increased demand for labor and higher purchasing power from equity gains—further increases competition for housing in these high-growth regions.
Restoration of Capital City Buildings
Like many things – politics, social justice issues, educational trends – the pendulum tends to swing from one extreme to the other. The Sunbelt and Midwest regions had their time in the sun from 2017-2022. Now, cities like Austin are dealing with a hangover as builders work through their inventory. Maybe 2026 or 2027, will be the best times for them because of the lack of housing at that time.
But in the next few years, I suspect that big city housing will start to do well because of the return to jobs. So if you own a property in one of the cities with the highest return-to-work rates, I can hold you. If you’ve been thinking about building a rental property portfolio, you might want to buy before the big wave of liquidity for tech and AI companies enriches tens of thousands of workers.
And if you’ve been a long-time landlord looking to simplify life and earn pure income, your time to power up and sell may be coming.
Employees and Employers Are Rational Actors
People who want to get paid and promoted will be subject to their company’s policies for returning to the office. And most of the workers want to be paid and promoted.
Meanwhile, companies with top executives who once championed work-from-home policies are beginning to realize that encouraging personal interaction is essential to staying competitive. They are driven by the lure of mega-million-dollar windfalls. That is capitalism in action!
Yes, it’s sad that the good times are over for many who have to go back to the office. But all good things must come to an end. At the very least, you can invest in companies that take the job seriously enough to drive your salary and returns. Then you can also invest in real estate in the cities where those companies are based.
For lifestyle purposes, aim to work for companies that allow you to enjoy perks like playing pickleball during the day while still getting paid. These opportunities will become increasingly rare, so when you do find one, value it as you would a trusted auto mechanic or mechanic.
Retirees Benefit from Returning to the Office Too
For retirees, there is a silver lining to workers returning to the office: life becomes a little more peaceful. Booking courts, fishing matinees, and strolling through the parks will probably be easier without the same weekday crowds. Certain tasks will take less time, and your favorite places will feel less crowded.
As millions return to fluorescent-lit offices in pursuit of more money, your decision to leave the floor will pay off even more—giving you greater peace of mind and freedom.
Readers, what are your thoughts on investing in houses and homes in cities when workers return to offices in large numbers? Do you believe that big city real estate is poised to improve in smaller markets that have benefited from the work-from-home trend? Share your details below!
Invest In Real Estate Strategy
If you don’t want to buy and manage physical rental properties, consider investing in private real estate funds instead. Fundrise is a platform that allows you to invest 100% passively in residential and industrial properties. By investing as little as $10, you can easily call for dollar value in real estate without the hassle of owning a property. .
I have personally invested over $290,000 through Fundrise, and they have been a loyal partner and long-time sponsor of Financial Samurai.
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