The real estate market in major cities like Frankfurt and Berlin has long been characterized by high demand, skyrocketing prices, and fierce competition for rental properties. Many people who choose to live in these urban centers do so not necessarily because they must, but because of perceived prestige, social trends, or the belief that raising children in such areas will provide better future opportunities. However, with the increasing prevalence of remote work, particularly since the COVID-19 pandemic, one would expect a shift in demand—leading more people to consider moving away from these expensive urban centers to more affordable areas.
Yet, despite the flexibility remote work provides, the expected migration away from major cities does not seem to be happening at the scale one might anticipate. While some individuals have taken advantage of the opportunity to relocate—like a coworker of mine who found significantly cheaper housing outside the city—most still choose to remain in these high-demand urban locations. This raises important questions: Why are people hesitant to leave these expensive areas, and what does this mean for the future of housing markets?
The Prestige Factor: More Than Just Necessity
One undeniable aspect of city living is the prestige associated with residing in well-known metropolitan areas. Many individuals and families continue to opt for expensive cities, not because they need to for work or education, but due to the social status that comes with living in such places. The association of major cities with success and opportunity often overrides rational financial considerations.
Furthermore, some parents believe that raising children in cities like Frankfurt or Berlin will offer better access to educational and career opportunities. They assume that urban schooling systems, extracurricular activities, and networking potential will provide their children with a competitive edge in the future job market.
The Remote Work Reality: Are People Actually Moving?
While remote work has significantly reduced the necessity of commuting, the reality is that only a small portion of professionals have chosen to move to more affordable locations. In my own experience working from home, I have come into contact with over 100 coworkers, many of whom are single parents like myself. Yet, I have only encountered one individual who made the move to a less expensive area.
Why is this happening? The answer may lie in the following factors:
- Inertia and Social Networks: Moving is a complex and often emotionally challenging process. Many people hesitate to leave behind established social circles, schools, healthcare services, and familiar surroundings.
- Perceived Future Uncertainty: Some remote workers worry that their work-from-home privileges might not be permanent. If they relocate and later need to return to the office, they could find themselves in a difficult situation.
- Limited Awareness: Many individuals may not fully realize the financial benefits of moving or are unaware of viable alternatives in suburban or rural areas.
Will Housing Demand in Cities Eventually Decrease?
In theory, the rise of remote work should gradually lead to a redistribution of housing demand, making smaller towns and rural areas more attractive while easing pressure on major urban centers. However, societal attitudes and preferences play a major role in shaping real estate trends. As long as people continue to associate city life with success, networking, and future opportunities for their children, the expected shift in demand may remain slow.
For this trend to take off, there needs to be a shift in how people perceive suburban and rural living. Governments and businesses can play a role by promoting remote-friendly policies, improving infrastructure in smaller towns, and showcasing the advantages of a more affordable, less stressful lifestyle outside of major cities.