For most of his 51 years, attorney John Gaughan has called Lackawanna home.

He grew up on Shannon Drive, and after returning from six years studying and working in Albany, he bought a house in the city in November 2009, where he lives with his two dogs – two doors away from his childhood home.

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"It’s a great neighborhood, a great house, and the taxes are very cheap," said Gaughan, who has worked at the Buffalo law firm Barclay Damon since 2001.

But he also loves the quieter, quaint and more picturesque lifestyle of Ellicottville. "It reminds me of a Norman Rockwell-type, similar to Saratoga Springs," Gaughan said. "Everybody knows your name."

So now that his firm – in the wake of the Covid-19 pandemic – has changed its policy to allow its staff to work remotely much of the week, he's set his sights to the south. In July, he bought a 4,230-square-foot home with four bedrooms, on a hill close to the Holimont ski resort, for $1.05 million.

"It’s the perfect situation," Gaughan said. "It allows professionals and other occupations to have the ability to live and work remotely."

A new world

Gaughan is one of a growing number of urban professionals who are taking advantage of the workplace changes wrought by the Covid-19 pandemic that now allow for a more flexible life.

Instead of staying tied down to an office with a daily commute in dense areas, they're leaving the hustle and bustle of the big city – whether that's New York, Pittsburgh, Cleveland or Buffalo – and buying homes in smaller, more rural locales, as long as there's reliable high-speed Internet to facilitate their work.

"I do see some people saying I can work wherever I want," said Jerry Thompson, broker-owner of Century 21 Gold Standard in East Aurora, who has agents working in more rural areas, including Rushford in Allegany County. "They learned lifestyle lessons that it could all be taken away quickly."

But in doing so, they're also driving up sales, prices and property values in those smaller towns and villages, which have had the biggest price increases across Western New York since the spring of 2021, with prices soaring by 50% or more in just a year and a half.

Locally, that includes most of rural Cattaraugus County – not only tony Ellicottville, but also Little Valley, Machias, Salamanca, South Dayton, Randolph, Olean, Franklinville, Great Valley and Allegany, according to new research from the Federal Reserve Bank of New York.

Fed economist Jaison R. Abel said about half of the surge in home prices during the pandemic can be traced to demand caused by remote work.

"This shift to remote work is going to be one of the more important developments that’s going to be permanent out of the pandemic," Abel said, noting that 20% of all work is now done remotely.

And it's happened quickly and very recently. In fact, 16 of Cattaraugus County's 22 ZIP codes reported at least a 50% increase in home prices between March 2021 and September 2022, according to data from the Zillow Home Value Index compiled by the Fed researchers. The remaining six all recorded at least a 43% jump.

The data factors in all home values, not just from the handful of sales in a given rural area.

"Nobody could have predicted what we saw in that two-year period of time," said Tina Dillon of Howard Hanna Real Estate Services in Ellicottville. "A lot of people, even from the metro Buffalo area, decided to relocate to the quiet of Cattaraugus County. It gave people so many more options for their lifestyle and family."

Melanie Pritchard, an associate broker with ERA Team VP Real Estate and Holimont Realty, and a former Buffalo television reporter, said she had never seen so much demand in the area during her 22 years as a real estate agent. She and others on her team have sold to clients from New York City, Buffalo, Rochester, Pittsburgh, Niagara County and Ohio, as well as Canada. Gaughan was one of her clients.

"We certainly saw a lot of activity," she said. "The Ellicottville market is the biggest draw. There were a few people that would go outside of the Ellicottville immediate area, but most of them wanted to be close to Ellicottville, just to able to also enjoy all the amenities here."

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Not just Cattaraugus

Luigi Rodo, an agent with Hunt Real Estate Corp.'s Buffalo office, said he's handled sales in Franklinville, Gowanda, Dunkirk and Fredonia, for "folks that are based out of Buffalo but are willing to live there because they are able to access their jobs remotely and it's more affordable living." He's even had two clients relocate recently from New York City to Franklinville – one of whom works in a job tied to Wall Street.

"The remote work is a huge factor for a lot of folks that are doing that," he said. "They’re able to conduct their business and do what they’re able to do without a problem."

But Cattaraugus wasn't the only affected area in Western New York. Farmersville Station in Allegany County saw prices rise 42% – the most of that county's 23 ZIP codes. Eight of Chautauqua County's 30 ZIP codes experienced upwards of 40% growth, led by Lily Dale at 52%, Stockton at 44%, and both Ripley and Dewittville at 43%.

In Genesee County, the range was narrower, with the 13 ZIP codes seeing increases of 19% to 25%, led by Corfu, Pembroke and Alexander. Medina and Ridgeway had the highest growth in Orleans County, at 19%. And Wyoming County had the lowest increases, but it still topped out at 20% for the Village of Wyoming.

Melissa Haenle, an agent with WNY Metro Roberts Realty who sells homes in Wyoming County, said she got "several phone calls just from people from New York City that really wanted to purchase out here."

"I’ve seen it a lot from people from downstate moving up here, as well as people from the suburbs of Erie County moving out to Wyoming County and Cattaraugus County," she said. "It wasn't the price of the houses that were of interest to them. They obviously had the money to pay. It was more having the land and having the space, getting out of the suburbs and city area. A lot of people didn’t like the lockdown."

The rising prices in rural Western New York are an offshoot of the strong price increases across the entire region. Home prices in the Buffalo metropolitan area have risen faster than almost every other metro area in the state and the New York City metro area during the entire length of the pandemic from February 2020 until September 2022, racking up a 39% increase in home prices.

Only Kingston in the Hudson Valley was higher, at 53%, while the national increase was 42% – a pace that Abel and three other Fed economists termed "astonishing" in their report. They noted that it was particularly remarkable in upstate New York, where "economic growth was sluggish well before the pandemic."

"Home prices grew very sharply, almost everywhere," Abel said. But "what might be surprising is that home price growth was actually most rapid in the least dense areas."

To be sure, home prices in Western New York, and upstate New York in general, were inexpensive to begin with, so there was plenty of room to grow. And even with the run-up, they're still more affordable than many parts of the country.

"Despite the extremely robust home price growth in Buffalo, especially when you compare it to the history, home price growth is actually below average in Buffalo," Abel said. "There's many parts of the country where housing got more frothy than in Buffalo or in our district as a whole."

Cities lost appeal

Much has been made of the record-low inventory of homes for sale and the record-low interest rates that until this year were the driving forces behind the bustling home sales and soaring prices across the country. The supply of homes has been particularly tight in upstate New York, and homebuilders have been unable to keep up because of worker shortages, supply chain disruptions and rising material prices.

But Fed economists say there's more to it than that, and they pegged it to the appeal of working from home in low-cost surroundings.

"The value of urban amenities, things like going out to bars and restaurants or going to museums or even taking public transportation, those fell because of fear of contagion and also because of restrictions that were put in place," Abel said. "So this reduced the incentive to want to live in these dense urban areas."

Meanwhile, workers and employers got used to work-from-home scenarios, and many employees liked the experience. Big-city dwellers also found they wanted more room, more freedom, and more time with their families.

"Fundamentally, the ability to work from home, and the shift to work from home, reduced the need to live near your job, and it actually increased the demand for physical space, like an extra bedroom or office," Abel said.

Going further out

They're not just coming from New York City or Buffalo either. Take Stuart Pierson, a 54-year-old fee-based financial planner from Northern Virginia. Pierson formed his firm, Piedmont Capital, in 2006 and has an office in Urbanna, Va.

But his clientele is nationwide, and even his Washington-area clients became accustomed during the pandemic to doing business with him via Zoom meetings, emails and phone calls.

So while he still maintains his office, much of his work is now remote, which made him mobile.

"We’ve always thought about moving to a place that would afford us a more comfortable lifestyle than Northern Virginia. It’s a lot like New York City – extremely dense and high traffic," Pierson said. "I was looking for a combination of a great town in a great state, that had all the lifestyle amenities that my family and I were looking for."

He loves to ski, so he and his wife, Jordan, looked at moving to Colorado. Instead, they found Ellicottville, and bought a 1,768-square-foot house with four bedrooms in the village in October 2020 for $305,000.

"We just found Western New York and Ellicottville a better choice," Pierson said. "And the people of Western New York have been amazingly friendly. We’ve become huge Buffalo Bills fans."