Remote work has triggered a surge in housing demand and reshaped preferences for housing locations. Given the heterogeneous nature of housing supply across regions and its long-term elasticity, our spatial housing model illustrates varying impacts on rents and populations over time from 2020 to 2022. While short-term effects resulted in significant rent and price hikes, our projections suggest that in the long run, increased housing demand will raise rents by only 1.8 percentage points. Conversely, shifting location preferences will marginally decrease rents by 0.3 percentage points, particularly affecting cities with higher initial cost-of-living indexes. Our analysis underscores that despite initial rent increases, the trajectory points towards potential long-term declines, potentially resulting in rents lower than pre-pandemic levels.

https://www.sciencedirect.com/science/article/pii/S0304405X23001265