The Popularity Of The Home Office In Real Estate

This is the year most of us have spent our lives at home. For those of us lucky enough to still be employed, a large portion are working from home at least some of the time. With this change in setting, we’ve become intimately familiar with our homes’ benefits and limitations.

Whether you’re working off the kitchen table, you’re set up in the basement or you’ve cobbled something together in a spare room, it’s likely that you’ve found the need for a dedicated home office. In this article, we’ll take a look at how the rising popularity of the home office has impacted the real estate industry.

Rise Of The Work-From-Home Office

While working from home is nothing new, it’s now a more widespread practice due to the COVID-19 pandemic. In 2018, the U.S. Department of Bureau and Labor Statistics reported that 23.8% of full-time employees worked some amount of time from home. Still, most employees were not spending multiple days a week working from home.

The attitude of many employers, up until this year, had been that people work more efficiently in the office. If anything, though, COVID-19 has taught us not to rule out the idea that people who work from home can be just as productive as office workers, if not more productive.^[1]

In fact, a survey from USA Today in May 2020 found that 54% of people report that the pandemic has had a positive impact on their productivity. Fewer meetings, no distractions from co-workers and office chatter and no commuting can mean more quality time spent working.

Besides productivity, employers are realizing other benefits with working from home. They can consider leasing smaller, cheaper office space, cut back on supply and utility costs and hire candidates from out of the area.

Whether working from home will stick around after the COVID-19 pandemic has passed remains unknown. Employees are demanding work-from-home flexibility from their employers, while some are realizing that their office space is expensive – if their employees can work from home and be productive, is all that space even necessary?

It’s hard to see a world where we’re not working from the home office at least part-time.

^[1] https://hbr.org/2020/08/research-knowledge-workers-are-more-productive-from-home; https://www.bloomberg.com/news/articles/2021-04-22/yes-working-from-home-makes-you-more-productive-study-finds

More Mentions Of Home Office In Real Estate Listings

The housing market has taken notice of this shift in the work landscape. We at Rocket Homes® have discovered a trend in listings. We scraped our listings for the mentions of “office” for the periods of March – July 2020 and March – July 2019.

Our thinking? With so many working from home, more people are looking for extra workspace. We weren’t wrong.

From March to July this year, there’s been a 16.8% increase in the number of listings that contain the word “office” as compared to last year.

While working from home isn't new, COVID-19 has made it common. Sellers are using their homes’ extra space to market the sale, knowing full well how many people are looking to buy places with a home office.

We aren’t the only ones to notice an uptick in home listings touting office spaces. To get the inside perspective on this market trend, we interviewed two people in the field of selling and buying homes.

Sellers Marketing Their Homes With Home Workspaces

Maegan Darbe

Maegan Darbe is a REALTOR® who specializes in listing and selling homes for her clients. She works in several states across the country, including Michigan, Ohio, North Carolina, South Carolina, Georgia and Tennessee. We’ve asked her if she’s noticed a rise in demand for home office space.

“People are looking for more space and dedicated work areas,” Darbe says. “A lot of people are looking for homes where the indoor and outdoor space accommodates the whole family for most of the day. This includes home office and homeschooling space.”

She goes on to say, “I'm selling a lot of homes right now for people who are looking for more dedicated work areas in their next home.” Her clients, as well as the people looking to buy, are expressing interest in homes with more working space. This trend rings true for families, as parents are working from home alongside kids doing school from home.

While it’s clear to her that people are looking for more space to work, Darbe does point out that “designating a room as an office can be a little risky. You might turn away a good buyer who doesn’t want an office space. Sometimes it’s best to leave the purpose of a room, a nook or open space up to the buyer. However, the trend for emphasizing comfortable home working areas is absolutely on the rise.”

Buyers Want Home Offices

Megan Blum

From the buying side of things, we’ve spoken with Megan Blum, a Rocket Homes Verified Partner Agent from FLUX Real Estate in Seattle. Blum confirms that she's seen an increase in buyers saying a home office is important to them since COVID-19.

“There has been a significant increase in needing a home office for one of the bedrooms or even narrowing down a search to four bedrooms to make sure there is a bedroom available to turn into an office as it can be hard to find a home that has three bedrooms plus a designated office space,” she says. “Some buyers even need two offices because both partners are working from home and need their own, individual space.”

She notes that “buyers that are in a more limited price range have been making guest bedrooms into a dual-purpose room, creating an office against one of the walls. It’s become a requirement for almost all of my buyers in this market.”

Blum has noticed other trends happening since COVID-19 and the rise of the home office. “People are moving out of congested areas to have more space and privacy for remote working,” she says, “and also bigger homes that are more guaranteed to have designated office spaces for one or both parties living in the household.”

According to Blum, adding a home office to your listing can make your home more appealing. Even in competitive seller’s markets like Seattle, you may get better offers with a home office.

“With inventory so low in the Seattle market, specifically, all homes are likely to sell, but including an office space in the conversation when doing a showing adds to the appeal of the property and increases the chances of buyers making a more competitive offer,” she says. “The reality is that more people are now requiring a home to be a comfortable place to live and also a comfortable place to work.”

Adding The Office To The MLS

With an increased demand for home offices and built-in workspace in general, there’s a clear need for the multiple listing service (MLS) to include some version of “home office.” Just as you would list some rooms as “kitchen” and “living room,” a greater number of people working and schooling from home means “home office” should also be included.

“It would be incredibly helpful if the MLS actually had a place where you could specify a den/office in an MLS search,” Blum says. “In some homes, the bedrooms aren’t functionally sound to have an office, or the bedrooms have to be used by every member of the family, so their only chance at an office is if there’s a designated office space. We do our best to include office space in the marketing remarks (property descriptions), but some people skip straight to the stats.”

Upgrading Your Home Office

If you’re not planning on selling your home or looking for a new home with an office, it’s still a great time to upgrade your home office. Especially if you’re working from home, you want a space that’s functional and comfortable.

Whether you're settling in for work or staging an open house, there are three main factors of any good home office to consider:

Space

It could be a small space that’s little more than a cozy nook or a large den. A quiet space with natural light is the ideal place for a home office.

Furniture

If you’re working from home, investing in a comfortable chair and a desk that fits your needs is essential. You should also consider pairing them with bookshelves and a small filing cabinet to meet your storage needs.

Technology

You’re likely going to need a computer and an internet connection to get your work done. If you’re on Wi-Fi, look into upgrading your router to avoid losing signal. The last thing you want is to be dropped during an important video meeting.

Home Office Tax Consequences

The 2017 Tax Cuts and Jobs Act eliminated the deduction for home office expenses for anyone who receives a W-2. If you’re self-employed or a contract worker, you can still deduct expenses. According to the IRS^[1], a home office must pass the “principal place of business” test, be used for “administrative or management activities” and there must be no other location where you conduct “administrative or management activities.”

^[1] https://www.irs.gov/taxtopics/tc509

The Bottom Line: Working From The Home Office Looks Like It’s Here To Stay

With the pandemic continuing for the foreseeable future, it looks like having a dedicated home office could add value to your home. Learn more about how to increase your home’s resale value.