Return-to-office mandates are helping drive up housing prices in these 10 cities

• As companies call employees back to the office, more people are moving closer to their workplaces.
• This has increased competition among buyers in cities with a limited number of homes for sale.
• Buyers in San Jose face fierce competition and face the most above-asking prices in the nation.

The rise of remote work freed many Americans from the daily commute to an office, empowering them to live wherever they choose.

It led many people to leave bustling cities in the Northeast and on the West Coast for smaller spots in the South, particularly in states like Texas and Florida, where the cost of living is relatively lower, and the climate is more enjoyable.

However, as businesses nationwide summon employees back to the office, many former remote workers are returning to the cities they once left or moving to commutable places. They're often entering real-estate markets where housing options are scarce.

It's contributed to more buyer competition in several cities across the country. On Wednesday, the Federal Reserve announced an interest rate cut, which is expected to lower mortgage rates in the coming weeks. This decrease will enhance purchasing power for many Americans and is likely to encourage more homebuyers and sellers to re-enter the real estate market.

Realtor.com analyzed sale and listing price data from 75 of the largest US metropolitan areas to determine where homes sell for the most above their asking prices.

Many are located in the Northeast, in areas "within commuting distance of the region's major economic hubs," said Hannah Jones, senior economic data analyst at Realtor.com. Others are in the California Bay Area, where a chronic lack of inventory has cranked the "competition up another notch," she added.

According to Realtor.com, San Jose leads the nation, with homes selling 6.2% above their asking prices. The city's median home price is $1.3 million.

Located just over an hour southeast of San Francisco, near Silicon Valley, San Jose is an attractive place to live, largely due to its vibrant tech scene, which includes major players like PayPal, eBay, and Adobe. This concentration of multibillion-dollar companies draws a steady influx of tech professionals. As a result, the demand for housing, combined with a perpetual housing shortage, has made the real-estate market exceptionally competitive.

Return-to-office policies from various companies could make the San Jose market even hotter, a local real-estate broker said.

Over the past year, Google and Zoom, which have offices in San Jose, shifted from pandemic-era remote work policies to hybrid models, encouraging employees to return to the area. Recently, Amazon, which has offices near the city, also announced a nationwide mandate for all corporate employees to return to the office full-time starting in January.

Lex Orosco, a real-estate broker at Real Silicon Valley, told Business Insider that as tech workers return to the Bay Area, sale prices will likely rise, especially if interest rates continue to fall.

"The real-estate market will probably heat up even more as people move from far areas to be closer to work," Orosco said. "As rates come down, we may see a bit more inventory in the market, which will cause more buyers to jump back in, too. This will continue to drive prices up."

Here are the 10 US cities where homes sell for the highest amounts above their asking prices.