Many people I talked to in the bay area temporarily left b/c housing is unnecessarily expensive and the apartments there are not great to WFH.
Most of those people fully plan on returning to SF once their offices open back up, because they feel that they need to be in the office in order to grow their career.
I think its a bit presumptuous that tech workers are perm leaving the city.
For 15+ years I have noticed a certain set of people trying to make a claim that people are leaving or desire to leave "the cities" for the suburbs or rural areas in America. NYC growth has slowed since 2017, and certainly there will be a rush for cheaper housing as a result of COVID, but the physics that have driven people to urban centers hasn't changed at all.
Is it really so easy to move out in the few short months since the pandemic hit? I wonder if these people were living in a shared housing situation and didn't have a lease or a lot of physical possessions to worry about. I'm in downtown SF and have been considering moving somewhere in the Bay Area where I can step outside and not be in a literal and figurative cesspit, but it's really not easy. Or maybe I'm just getting old and have too much furniture. I certainly can't imagine just hopping out of town when the pandemic hit and then hopping back once it blows over.
If you're living somewhere with a third the cost of SF, is it necessary to further your career growth? Outside the city, people will realize there's more to life than high tech and lean into the "life" portion of work-life balance.
Career growth slides up and down the priority stack for many as they go through life. For young folks just getting started, absolutely. For folks that are 15-20 years in, starting to plateau in comp, have a family, maybe have some parents that need care, etc, career growth can start to fall away as a major motivator.
I agree that career grow will require living close to HQ, but some people don't care too much about career growth and prefer to live in a place they like. So I suspect that many people will never return.
Anecdotal, but I was actively looking to get out of FAANG for a fully WFH position and managed to get one. About a month and a half later - with my lease coming due - I left San Jose. No need to pay the exorbitant rent and taxes and get peanuts in return.
I am really happy that people who always wanted to work remotely outside of crowded and overly expensive cities now have an opportunity to do that.
I also remember seeing in news some states mandating quarantine for people moving b/w states. I wonder if that is intended to deter people from making such move out of cities which can lead to the collapse of the cities businesses.
A lot of companies didn't take remote work seriously. They used it for small teams and specific areas but as the pandemic forced everyone to adopt WFH and remote every company has had to become efficient at it.
I think a lot of the survey is accurate. There will be a lot of people that decide to permanently relocate. It's already visible in the market data from rent because even as people are considering leaving, the second side of the equation is that people have stopped moving in.
These two factors together will create a shift whereby for the next two years rents will drop, however after that, as the world moves forward and recovers, SF will ultimately rebound as other metro areas as well.
This will be a short term solution, to a long term problem, in that there isn't enough housing supply in SF for the next decade unless this trend is permanent, which I don't believe that it is.
Yea, I have a similar take on it that as this WFH drags on, I mean most companies have said until the end of the year. It's been 4 months and feels like forever, add at least another 6 months and we're going to back into the new normal.
If for example Newsom or SF pushes back dates or asks for draconian style "masks all times, 2 people per conference room" or whatever vs. what has been forced to "work fine" for all these companies, people will just realize this is silly to try and put the "genie back in the bottle".
Status quo pull works against returning to offices I believe more and more as this drags on.
I've lived in NYC for nearly 10 years, have no plans to leave, and would really, really welcome a rent or apartment price reduction. However, I've been promised this magical thing every time there's some sort of disaster or terrorist attack and it never seems to happen! Curious!
Sarcasm aside, when we will we start to hold people like this accountable for the implicit and explicit predictions that are so easy to make? How can we even evaluate if this ever came to pass?
As a fellow New Yorker, I think probably a much bigger impact for us is tourism and foreign wealth parking. People coming to NYC and staying in AirBnBs and Russian/Chinese/Saudi wealth dropping cash for properties to give their children pieds-a-terre have a way bigger impact than other middle/upper-middle income tech workers.
There's pretty robust housing market data out there.
Anecdotally, an apartment in my building in SF with the exact same layout as mine (I got new terms and re-signed the lease in May) is now renting 10% cheaper than I signed two month ago.
Even if NYC rents don't go down, they can go up [faster] elsewhere driving nation-wide inflation, effectively reducing NYC rents. I don't know one way or the other whether this has happened but it's something to keep in mind before scoffing at historical predictions of rents going down in NYC
I don't live in NYC, but NYC will always be a desirable place to live, especially for older population. It's an epicenter for culture. It's a popular tourist destination. It's a home to old money. It has 2 giant international airports nearby. Barring some catastrophic environmental or natural event that makes it undesirable to live, I personally feel people will always want to live in NYC. It's an icon, like Paris and London.
I’m really worried that we haven’t even seen the start of this financial unraveling yet. I’m sure tech workers like us will be okay, but essentially everything else is broken. If the rest of the economy is falling apart tech won’t be far behind. Is there anything that can alleviate my concerns?
The author says the stock market rallies are "Not suprising when you take into consideration the amount of liquidity being injected into markets by the BOJ, ECB, FED and PBOC."
Have we ever seen this happen before - either in the US or another country in a similar circumstance? What are the medium- and long-term consequences of this amount of liquidity being artificially introduced?
I'm finding the longer-term market behavior basically impossible to predict & understand; I expect I'm not the only one but would love it if anyone can shed some light on what to expect in the next few years.
Cheap money is addictive. Japan has had cheap money (basically zero interest rates) for decades. It appears very difficult for them to get out of that place.
Cheap money (very low interest rates) means cheap mortgages, and in turn this means high real estate prices. So high that you produce a trap. Housing becomes an investment vehicle, and increasing rates means you are destroying savings for millions and millions of people. Millions of people who are politically active. Whatever measures someone tries to enact that result in their real estate depreciation, they'll make sure to oppose.
Raising interest rates then requires fortitude. Generally, a developed country's central bank is independent of the other branches of the government (executive, legislative, judiciary). It has so much power, that it should be recognized as the fourth branch - monetary. Being led by technocrats who, in principle, should not care about voting arithmetics, the central bank should not hesitate to raise rates when the economic stimulus is not needed anymore.
But theory is theory, and practice is practice. In real life, you may have a president who threatens the central bank governor via twitter, and the governor all of a sudden decides to cut rates instead of increasing them. And that was before Covid19.
Prediction (and not only mine): we'll be stuck with these close-to-zero or negative rates for decades to come.
That means real estate will continue to be sky-high. That kills mobility, that makes it hard for the young generation to get jobs in the main metropolitan areas.
Maybe working from home will be an antidote to that.
Every single metric points to low returns, probably even negative over the next 5-10 years: CAPE, average investor allocation to stocks vs bonds, bond yields themselves, market cap / GDP, basic demographics. That is all without even considering covid and the response to covid.
Many predicted doom and gloom and massive inflation when this started during the last recession, but that never came to pass.
I have no idea what will happen, and am kind of wary of everyone trying to sell a story. There are a lot of doom & gloomers who predicted 8 of the last 3 recessions, as well as "this is fine" optimists too.
My impression is that this response is basically a replay of the response to the 2008 crisis, perhaps on a bigger scale.
My prediction is that market behavior is going to be driven by politics. Wealth inequality was already intolerable and the consequences of this crisis are almost entirely falling on the working class. It is obscene that equity holders are doing as well as they are doing with the amount of unemployment we have at the bottom. The other shoe will drop.
As long as financial instruments absorb the extra money, you won't see much happening on the real economy. Only the shadow of a huge finance tower with the involved people getting crazy (and always crazier) amounts of money that aren't available at the real side of things.
If people suddenly decide to cash-out, all hell breaks loose. But on a more realistic scenario, it only does so slowly, so make sure you are long on luxury goods.
I'm not sure how seriously I would take survey data from Blind. IME Blind's population tends to be the crankiest and most reactive people in tech. It's not surprising that they're unhappy on the whole.
I have a rental property in Santa Cruz county that came up for rent in June. I talked to the property manager about the rental market and he said he was getting calls from people who work in San Francisco but want to live in Santa Cruz! So yes - Santa Cruz is benefiting from the new work at home policy.
"I think some of this is temporary. My friend just left NYC. They loved it there, but since everything is closed, there was no reason to stay. The bars, clubs, and restaurants were the main reasons they were there.
They figured they might as well save money and move back home with their parents until everything opens again. Then they'll probably go back.
I suspect things will pick up in SF as the bars and clubs and restaurants open again."
More companies are now hiring remote staff, so this is certainly going to have a long term effect. The rent might keep dropping, and at some , will there be an equilibrium because more people might start moving in because of the reduced cost of living?
Not necessarily. Detroit, for example, just stopped having people show up after it stopped booming. I certainly think it's possible to reach a new equilibrium, but I don't know if SF is going to manage it.
SF has seen its economy and population ebb and flow a lot over the last 50 years. The city in the 70's was full of empty buildings and houses. Then the Gay boom of the 80's changed the population and gentrified a lot of the dilapidated communities. Then the Savings and Loan crisis led to another slump... Fast forward to the late 90's and everything was booming. Real estate exploded with the Dot Com boom. And then....
If you were around SF in 1999-2001, you know how fast things can change. There was a mass exodus back to the east coast. Rentals that used to garner 40 applicants were vacant. Things were ugly until a few years later when the next boom hit.
Will this one be any different? Maybe. They built a lot of office space but SF is and will always be a highly desirable city. Santa Clara or Fremont? Not so much...
High-taxation states that rely on their highest-income citizens to pay for massive pension obligations and bureaucracy are in for a rude awakening. Short of making it illegal to move out-of-state, I don't see how they can stop this from blowing a hole in their finances. I consider this a good thing - it (hopefully) will enforce some fiscal discipline - and the fallout will be interesting to watch.
NYC already has arrangements for this. Since a lot of people live in NJ and CT, they have city taxes that apply to people working there and living in other states. I believe most states with high tech industry will do just that. It is not a difficult problem to solve like some people imagine.
This assumes that the states that fund pensions and "bureaucracy" (which is a term that often is used for gov spending regardless of efficiency) are not desirable places to live in general (sometimes as a result of spending). As a separate point, California doesn't even hit the top 20 states by per capita spending. [1]
Personally, I think people that move to lower-taxation states are going to be in for a rude awakening when they realize how poorly funded local infrastructure is and how much they took for granted.
Speaking as someone that's lived all across the US, I don't think people understand how dire even the major non-coastal cities can be.
Wealth transfer/vacancy taxes are one proposed solution. There's a guy running for mayor in Berkeley that wants to impose a wealth tax for example, and his scheme to prevent people from moving is to charge massive exit taxes to get their money anyway. Which I doubt would hold muster in any court, but who knows.
Human behavior is always complex and is rarely capture merely by a single number like "Rent".
Yes, rent is the #1 problem in San Francisco and maybe even California, but it is high because there is a lot of demand. Even building a million units might not make a serious dent in the rent pricing, because as the housing quality would improve more people would move in, and end up like New York: high rents and high density.
There are some unique features of the SF market: 25% of immigrants that will show a different elasticity (they literally cannot move to another state, it would be illegal), but at the same time immigration hostility means that people running out of visas will not be renewed, and then the general situation that moving out is more cumbersome, risky, and uncertain meaning it happens a lot less.
I wouldn't count on this to mean that rents will crash a lot more, but there might be a new equilibrium that is a bit lower.
I don't understand the post-covid question. If they are moving away from the bay area, are they planning on driving 2 to 3 hours a day to get to the office to show up?
If they only have to show up 1-2 days a week or 1-2 days a month, yes. This is what happened at one of my old companies in the SF Peninsula. Most of the employees lived in Walnut Creek or further. This was pre-COVID.
Not everyone wants to move out of California, but there are a lot of people who don't want live in the Bay Area; but want it easily accessible during the weekends.
I think it's reasonable to assume that most companies will have a different attitude to work from home after COVID-19. Whether that translates to 100% remote is an option for anyone who asks for it I'm not completely convinced. If it does it will certainly change my long term plans in a number of different ways.
[+] [-] dang|5 years ago|reply
[+] [-] itake|5 years ago|reply
Most of those people fully plan on returning to SF once their offices open back up, because they feel that they need to be in the office in order to grow their career.
I think its a bit presumptuous that tech workers are perm leaving the city.
[+] [-] ixtli|5 years ago|reply
[+] [-] baddox|5 years ago|reply
[+] [-] JMTQp8lwXL|5 years ago|reply
[+] [-] jcims|5 years ago|reply
[+] [-] badfrog|5 years ago|reply
The survey in OP suggests that they are, with two important caveats:
* This is obviously not even close to a representative sample of workers
* It's predicated on "if you had a choice", and we don't know how many people will actually have that choice
[+] [-] coliveira|5 years ago|reply
[+] [-] seangrogg|5 years ago|reply
[+] [-] temp231239|5 years ago|reply
I also remember seeing in news some states mandating quarantine for people moving b/w states. I wonder if that is intended to deter people from making such move out of cities which can lead to the collapse of the cities businesses.
[+] [-] raiyu|5 years ago|reply
I think a lot of the survey is accurate. There will be a lot of people that decide to permanently relocate. It's already visible in the market data from rent because even as people are considering leaving, the second side of the equation is that people have stopped moving in.
These two factors together will create a shift whereby for the next two years rents will drop, however after that, as the world moves forward and recovers, SF will ultimately rebound as other metro areas as well.
This will be a short term solution, to a long term problem, in that there isn't enough housing supply in SF for the next decade unless this trend is permanent, which I don't believe that it is.
[+] [-] xfour|5 years ago|reply
If for example Newsom or SF pushes back dates or asks for draconian style "masks all times, 2 people per conference room" or whatever vs. what has been forced to "work fine" for all these companies, people will just realize this is silly to try and put the "genie back in the bottle".
Status quo pull works against returning to offices I believe more and more as this drags on.
[+] [-] ixtli|5 years ago|reply
Sarcasm aside, when we will we start to hold people like this accountable for the implicit and explicit predictions that are so easy to make? How can we even evaluate if this ever came to pass?
[+] [-] chadlavi|5 years ago|reply
[+] [-] 1MoreThing|5 years ago|reply
Anecdotally, an apartment in my building in SF with the exact same layout as mine (I got new terms and re-signed the lease in May) is now renting 10% cheaper than I signed two month ago.
[+] [-] neutronicus|5 years ago|reply
Even if NYC rents don't go down, they can go up [faster] elsewhere driving nation-wide inflation, effectively reducing NYC rents. I don't know one way or the other whether this has happened but it's something to keep in mind before scoffing at historical predictions of rents going down in NYC
[+] [-] bluntfang|5 years ago|reply
If you aren't willing to leave, you aren't negotiating.
[+] [-] pcurve|5 years ago|reply
[+] [-] andy_ppp|5 years ago|reply
[+] [-] magneticnorth|5 years ago|reply
Have we ever seen this happen before - either in the US or another country in a similar circumstance? What are the medium- and long-term consequences of this amount of liquidity being artificially introduced?
I'm finding the longer-term market behavior basically impossible to predict & understand; I expect I'm not the only one but would love it if anyone can shed some light on what to expect in the next few years.
[+] [-] credit_guy|5 years ago|reply
Cheap money (very low interest rates) means cheap mortgages, and in turn this means high real estate prices. So high that you produce a trap. Housing becomes an investment vehicle, and increasing rates means you are destroying savings for millions and millions of people. Millions of people who are politically active. Whatever measures someone tries to enact that result in their real estate depreciation, they'll make sure to oppose.
Raising interest rates then requires fortitude. Generally, a developed country's central bank is independent of the other branches of the government (executive, legislative, judiciary). It has so much power, that it should be recognized as the fourth branch - monetary. Being led by technocrats who, in principle, should not care about voting arithmetics, the central bank should not hesitate to raise rates when the economic stimulus is not needed anymore.
But theory is theory, and practice is practice. In real life, you may have a president who threatens the central bank governor via twitter, and the governor all of a sudden decides to cut rates instead of increasing them. And that was before Covid19.
Prediction (and not only mine): we'll be stuck with these close-to-zero or negative rates for decades to come.
That means real estate will continue to be sky-high. That kills mobility, that makes it hard for the young generation to get jobs in the main metropolitan areas.
Maybe working from home will be an antidote to that.
[+] [-] anthony_r|5 years ago|reply
[+] [-] davidw|5 years ago|reply
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
Many predicted doom and gloom and massive inflation when this started during the last recession, but that never came to pass.
I have no idea what will happen, and am kind of wary of everyone trying to sell a story. There are a lot of doom & gloomers who predicted 8 of the last 3 recessions, as well as "this is fine" optimists too.
[+] [-] freewilly1040|5 years ago|reply
My prediction is that market behavior is going to be driven by politics. Wealth inequality was already intolerable and the consequences of this crisis are almost entirely falling on the working class. It is obscene that equity holders are doing as well as they are doing with the amount of unemployment we have at the bottom. The other shoe will drop.
[+] [-] marcosdumay|5 years ago|reply
If people suddenly decide to cash-out, all hell breaks loose. But on a more realistic scenario, it only does so slowly, so make sure you are long on luxury goods.
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] 0_____0|5 years ago|reply
[+] [-] maire|5 years ago|reply
[+] [-] jedberg|5 years ago|reply
"I think some of this is temporary. My friend just left NYC. They loved it there, but since everything is closed, there was no reason to stay. The bars, clubs, and restaurants were the main reasons they were there.
They figured they might as well save money and move back home with their parents until everything opens again. Then they'll probably go back.
I suspect things will pick up in SF as the bars and clubs and restaurants open again."
[+] [-] njsubedi|5 years ago|reply
[+] [-] x87678r|5 years ago|reply
[+] [-] SpicyLemonZest|5 years ago|reply
[+] [-] 12xo|5 years ago|reply
If you were around SF in 1999-2001, you know how fast things can change. There was a mass exodus back to the east coast. Rentals that used to garner 40 applicants were vacant. Things were ugly until a few years later when the next boom hit.
Will this one be any different? Maybe. They built a lot of office space but SF is and will always be a highly desirable city. Santa Clara or Fremont? Not so much...
[+] [-] seibelj|5 years ago|reply
[+] [-] coliveira|5 years ago|reply
[+] [-] d3ad1ysp0rk|5 years ago|reply
[1] https://ballotpedia.org/Total_state_government_expenditures
[+] [-] fzeroracer|5 years ago|reply
Speaking as someone that's lived all across the US, I don't think people understand how dire even the major non-coastal cities can be.
[+] [-] cptroot|5 years ago|reply
[+] [-] qppo|5 years ago|reply
No idea on the specifics.
[+] [-] conanbatt|5 years ago|reply
Yes, rent is the #1 problem in San Francisco and maybe even California, but it is high because there is a lot of demand. Even building a million units might not make a serious dent in the rent pricing, because as the housing quality would improve more people would move in, and end up like New York: high rents and high density.
There are some unique features of the SF market: 25% of immigrants that will show a different elasticity (they literally cannot move to another state, it would be illegal), but at the same time immigration hostility means that people running out of visas will not be renewed, and then the general situation that moving out is more cumbersome, risky, and uncertain meaning it happens a lot less.
I wouldn't count on this to mean that rents will crash a lot more, but there might be a new equilibrium that is a bit lower.
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] williesleg|5 years ago|reply
[deleted]
[+] [-] rhacker|5 years ago|reply
[+] [-] chaostheory|5 years ago|reply
Not everyone wants to move out of California, but there are a lot of people who don't want live in the Bay Area; but want it easily accessible during the weekends.
[+] [-] VBprogrammer|5 years ago|reply