Markets, Rent and WFH | Hacker News Reader

Markets, Rent and WFH

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Related from yesterday: https://news.ycombinator.com/item?id=23705741

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.

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.

I think people with that mentality were unlikely to live in SV in the first place

I think people with that mentality were unlikely to even get a job in SV. The ridiculous interview process alone should be a barrier enough.

That's not true. Many people go to big cities and SV because of the jobs. If they had a choice, they would prefer to live somewhere else.

I’m aware of that - as that was the reason I moved to the Bay Area as well. But I’ve been here a few years, I could get a job elsewhere without the leetcode interview. It just wouldn’t pay as well or have the same career growth track.

I don't care about career growth, but I do care about adding an extra 50k/year to my net worth for the same work with the same standard of living (or living in a crappy little hole-in-the-wall apartment and saving even more)

If I can make a competitive amount of money without living in California's armpit, I'm going to do it for sure

There are plenty of folks, especially on the technical side, that are here for the interesting work and high salaries. They could care less about climbing the managerial ladder. Also, millennials are starting to hit the mid-career phase, where it becomes clear that the 'ladder' gets really narrow, and things like children and mortgages start to weigh heavily on life choices. There will be plenty of folks who stick around, for sure. But by all indications (surveys, anecdotal reports, rent prices, etc...), there is plenty of interest in remote work.

If WFH becomes the new norm for a company, the concept of HQ would become irrelevant, companies I know are planning to fill physical work space with hotel seats, then you should be able to grow career via WFH no problem.

There will be a group of people who prefer not to WFH... and they will be in the office and therefore be much more involved/at the forefront of the company.

As a team lead in a group distributed team, we make sure we include everybody regardless of physical location. You Zoom with people enough, and over time you realize there is nothing extra than the office provided except easy distractions.

I'm rarely on a call of any size where everyone would normally be in the same office or often even in the same country. In some ways, I actually prefer the situation where everyone is on their own video chat rather than having a mix of a couple conference rooms and everyone else by themselves.

A couple teams I know even have a standing rule about everyone calling in individually on team calls even if a few people are in the same office.

I think a lot of people come at this from the perspective of small companies where everyone is co-located. But the reality at large companies if people are pretty scattered around even if they're not working from home.

I don't know how anyone can say that video calls and face-to-face time are equivalent with a straight face.

Of course, this is my opinion, but it seems pretty obvious that in-person interaction is what builds relationships.

Because we have statistics to prove it. The productivity of our whole eng organization has been great while being 100% remote. As a caveat to this, before the pandemic only half of us went to the office. I believe that helped us be prepared.

Also, haven’t you ever made friends online? Building relationships online is nothing new. In fact, many of the in person relationship building activities excluded different individuals. For example, going out for drinks with the team was never my idea of having fun. I am glad I don’t have to attend those anymore.

lol, care to share what kind of statistics you are looking at?

> I think its a bit presumptuous that tech workers are perm leaving the city.

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

This article doesn’t provide a baseline to compare the latest survey against? What percent of tech workers were already on the fence with regards to moving out before the pandemic hit?

Anecdotal but:

6 of my 9 direct reports have asked about permenantly relocating.

Myself and half my team are looking at permanently relocating out of Chicago. The pattern holds across other teams where I work.

Others I know in the industry are just up and leaving for remote-first companies and then moving to where they’re most comfortable.

The most important caveat is that "they plan to". People fail to do all kinds of things that they plan to.

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.

The Millenial generation is the largest birth cohort in the USA at this point. Their shifting preferences due to age may be very impactful on real estate generally, since many people are generally going through the same phases of life at the same time. This is likely one of the things that made urban real estate so desirable over the past decade too.

I've noticed the same thing and especially in tech. I have a few friends who are engineers and have this idea that if everyone went completely remote, cities would clear out as everyone rushed to buy acres of land in the country. I always find it a bit funny that these friends are also the ones who seem to have the most city oriented lives. They are going out to bars and restaurants all the time. They get their coffee from local artisanal coffee roasters and their beer from the many local microbreweries. They don't seem to recognize that the cities they think people want to flee offer more than just career opportunities.

They are most likely also childless. When you have young children, your demand for fancy restaurants, artisanal coffee roasters and visiting local microbreweries diminishes, as there are now more things that occupy your time and attention, and are not very conducive for above-mentioned entertainment venues. The trend of delayed or foregone childbearing is also contributing to increase in interest in urban life.

With very few exceptions, most of my cohort who went to NYC after graduation to work in finance moved to a suburban bedroom community around the time they had kids--or at least by the time the kids were going to need school. The alternative as they saw it was to upgrade their expensive Manhattan apartment or condo and to enroll their kid in an expensive private school.

I think I know one couple who stayed in the city and they were very well off.

>>The alternative as they saw it was to upgrade their expensive Manhattan apartment or condo and to enroll their kid in an expensive private school.

Those that might have been thinking of enrolling their children in private schools can do so more affordably outside of NYC. As an example, most top tier private school base tuition in the city is around $55K/year/child (not including "suggested donations") while most great private schools outside of the city are sub-$30K/year/child.

>>I think I know one couple who stayed in the city and they were very well off.

Public school is an option too, as long as one can navigate the byzantine DOE processes. From a housing/apartment perspective, if more people flee the city then there is a delicate balance where prices may come down for families to once again find them more affordable.

>When you have young children, your demand for... visiting local microbreweries diminishes, as there are now more things that occupy your time and attention

I totally agree and I'm sure the data supports it but before covid every brewery in Austin was packed with families. I actually stopped visiting many during the weekends because there would be dozens of loud kids with tired and defeated parents drinking nearby. It was annoying.

Austin is the kind of city that families move to after having kids. A microbrewery in Austin most likely has minivan parking and stacks of kids' high chairs.

If kids really annoy you that much, you might be the perfect candidate for moving to a city where having kids is actually difficult or expensive.

That's a great point, however, bars, restaurants, and artisanal coffee shops are the exact types of city amenities that are being devastated by the pandemic!

The current exodus is people realizing that they don't need to pay city prices if they're not able to benefit from city living.

If the virus ends up being an issue that can be resolved in months (Which I highly doubt), I could see a comeback relatively soon. But every month this drags on, more and more businesses that make city living great will go bankrupt, making city living less desirable, and it'll create a negative feedback loop that will take years to recover from.

While I share the sentiment that tech workers would likely leave tech hubs that doesn't mean they'd do it for homes in the country. There are plenty of other cities to choose from whose values may resonate stronger with them than SF/NYC/etc.

I can definitely see that happening more often. If you're not required to be in a certain office location, that opens up a lot of options for other cities.

I was disagreeing more with the extreme opinion that some have that remote work would cause these cities to become desolate. Would some tech workers leave? Definitely! Would they all leave? I doubt it.

> but the physics that have driven people to urban centers hasn't changed at all.

I'd actually argue that one thing that has changed is that companies are much more amenable to at least part-time work from home. I agree the economic forces that have concentrated wealth and opportunity in cities hasn't and isn't changing, but I do think it will be much more viable for people to work at jobs where they only go in to the office, say, twice a week. In that situation I think a lot of people would be much more willing to live further out because traffic (a punishing factor in most cities) then becomes much less of an issue.

Agree. I bought a house an hour (one way) from the city and I wouldn’t have if I didn’t know I could work 50-100% from home even if I switch jobs. That is - not all jobs allow that but enough of them do that I don’t need to worry about it.

If I work just every other day in the office then my commute time per day is 30 minutes one way effectively. In that sense, my suburb is moving closer to the city.

I also think there is a wider periodic trend of moving from cities and closer to nature and vice versa, which has (at least in Europe) been in the from-the-city phase for several years now.

I live near a commuter rail line but going into a city office still ends up being almost 90 minutes door to door. (Driving at rush hour is just as bad.)

I did it maybe half the time for about a year and a half but it really wasn't sustainable long term. I don't work out of an office today but I really wouldn't mind going into our downtown office once a week or so.

Most tech companies are allowing company-wide WFH for the rest of the year and in come cases permanently. That's tens of thousands of people who can be elsewhere for at least 6 months and possibly forever. That seems like a change in the "physics" of the magnetism that has drawn people to SF and the bay area for decades. A lot of people who had to stay in the area due to work but who have been considering a move are taking the opportunity to relocate to places with lower cost of living.

Add that to the thousands of layoffs at startups over the last few months (and a presumed hiring slowdown), as well as thousands of H1B holders who are reassessing life choices. There could be a serious shift in housing supply and demand in the bay area. Oh let's also not forget the huge impact the pandemic is having on the service and hospitality industries.

I think we could see a long-term reversal of the trend of 15% annual rent increase in SF.

I work for a small tech company and we've decided that we're going to be WFH permanently now. I can't imagine we're the only ones.

I work for a company with 400 devs that says we’ll be back on site in October. This is in the hinterlands though.

The physics, specifically, are high paying remote jobs. That's the thing that is specifically changing with Covid. As to the points being made about artisanal coffee shops not in rural areas? That's the exact thing that changes when you have urbanites moving to small towns. They start restaurants, bars and coffee shops.

except that has not materialized... like at all... yet

It takes more than just 4 months in a pandemic to start a trend of new businesses in a new town.

For ~60 years the "physics" that drive people into large urban centers has been changing, with the changes getting much faster at the last ~20 years.

I really don't think there's enough evidence to say the change is on the direction of people abandoning cities (but the largest ones already slowed down their growth to a minimum). But it's unreasonable to expect the COVID changes to be undone. Things change slowly because people resist changes; but once they change, people will resist reverting them.

> but the physics that have driven people to urban centers hasn't changed at all.

Other than being unable to do anything social and a large portion of restaurants/cultural opportunities are ceasing to exist?

I'm not paying $4000/month to get lukewarm food delivered at 20% markup.

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.

I think if you enjoy your job enough, then yeah. Some people just really like their job and org enough to dedicate extra time to it and that's fine (as long as their paid proportionally, don't work for free). I don't love my job and tech that much though

There are salary adjustments when you leave urban areas like SF.

Depends on the company and circumstances.

It's hard to generalize what everyone wants. Not everyone wants the same things in life.

There is also more to life than big cheap houses. People to meet and things to do with them, for example. A pleasant and engaging public realm.

In the "big cheap house" world people host parties.

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 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.

It's the more rural areas that are putting requirements on people coming into their states, not cities/states keeping people from leaving. (And the requirements I'm aware of may weekend getaways harder but they're not a real barrier for someone making a long-term move.)

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.

I've probably always had too much stuff. It's admittedly easier these days to have more possessions be small and digital. But moving has always been a major operation for me. Certainly not something I was going to undertake casually for a few months.

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.

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.

I'm also in NYC. If AirBnB went under, the real estate market here would be in deep trouble.

Sure, but that’s the point: a deep trouble for property owners is a boon for non-owners.

It's only deep trouble if they're over-leveraged, it's only a boon for non-owners who can afford to buy, and it only remains a boon as long as deep-pocketed buyers with long investment horizons stay out of the market.

I sure hope so!

That’s good for us as non-landlords though. I just want to live here. I don’t care about their ability to profit off of the demand which, by the way, has lead to a large amount of housing stock being left vacant!

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.

I left my apartment in SF in May and they now have it listed for about 15% less than I was paying and they are tossing in a $1k move in bonus.

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.

It's hard to observe what happens in real terms

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've lived in NYC for nearly 10 years, have no plans to leave, and would really, really welcome a rent or apartment price reduction.

If you aren't willing to leave, you aren't negotiating.

This is not true. I currently live in a really nice apt that I rent. My landlord hasn’t substantially raised my rent in 3 years. I will eventually buy once I find something that motivates me but what actually empowers me to negotiate buying is that I’m content to walk away from the table. I don’t have to change my living conditions right now even if I would really like to.

So you're saying you can't negotiating your rent unless you're willing to leave?

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?

A bit of therapy might help. Getting off of HN and other sources that cause you anxiety would be a good start.

Such a terrible response to someone venting out their economic anxieties.

Terrible or not, it should be a stock response to these kinds of questions. It would not surprise me if HN turned out to have an abnormally high amount of people with GAD and/or undiagnosed anxieties, especially in the wake of COVID-19 which was just a shitshow of one doom porn article on another.

So yes, go see a therapist if you're having trouble coping with the situation. You can thank me later for my "terrible response".

The underlying assumption in your comment is that worrying is bad.

Worrying is a great thing! When I get in the car, I worry I might have a car accident, so I wear a seat belt and pay attention to the road.

Either you think OP's concerns aren't well-founded or you think their psychological way of dealing with worry is bad. Since you don't know OP and OP is questioning the former, why not address the question "should we be worried about the economy?" rather than tell OP to go to therapy?

I think you're suggesting that a great depression isn't the most likely outcome of the current crisis, to say that maybe my fears are unfounded because X, is fine, but to say I need psycological help because I see an outcome down the road that I think a lot of people see coming [1].

[1] https://www.cnbc.com/2020/05/14/ray-dalio-on-coronavirus-eff...

To be fair that article gives a more rounded view - it might be bad for 5 years but we always recover. No need to worry about the huge US debt or a death spiral as things unravel!

The US economy is fairly diverse and adaptable. While a lot of jobs you are used to have or will disappear, new jobs will take their place. It's already happening.

I just saw an ad for a "contactless remote video broadcast studio". It's like an RC cart with a pro camera and teleprompter. Someone comes in a van and drops it at your front door, and then it gets remotely driven around your house until they find the filming spot. Then the director controls it remotely while directing you.

So we have the "camera delivery driver" and "cart maintenance" jobs that were created. That business will also need vans to drive the equipment around. And the director gets to keep their job and so does the actor.

There will for sure be a lot of short term pain as people adjust to the new reality, but the jobs will shift and people will come up with new ideas. The existing diversity of our economy will help a lot.

> So we have the "camera delivery driver" and "cart maintenance" jobs that were created.

How many jobs were lost to create 2 jobs? The cameraman? The union goes who do lighting, sound, etc.? The support staff for the on-site crew?

That's just automation losses though. But the point is, the economy is already shifting and adapting. The adaptations take time, but it will come.

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.

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.

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.

Interesting the tie-in to real estate & mortgages - makes a lot of sense, thanks for elaborating.

> Raising interest rates then requires fortitude

Like Paul Volcker, who did an immensely unpopular thing (soaring interest rates that caused unemployment in the short term) but ultimately created a much stronger economy.

Japan has very much not treated homes as an investment vehicle though.

https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...

I do have some recollection of commercial real estate being bonkers there for a while, so maybe they've managed to treat one as an investment and the other as something necessary for people to live in.

Japan has not treated homes as investments lately.

This was not always the case.

https://en.wikipedia.org/wiki/Japanese_asset_price_bubble#As...

In the '80s until about '91 there was a huge real estate bubble in Japan; house prices tripled or quadrupled over less than one decade. Could it be a coincidence that the short-term rate set by Bank of Japan went from a 9% in 1981 to 2.5% in 1991?

Your link shows that real estate prices remained nearly flat in Tokyo since 1995, but at that point Japan was already in the trap of zero rates and sky-high house prices. Prices simply couldn't go any higher. People were already taking 100-year mortgages in Japan in 1995 [1]. Salaries were not going up. Nikkei was going sometime up, more often down; and kept doing that for 2 decades.

On a comparative basis, real estate in NYC and London were much cheaper in 1995. But they steadily went up, and up, and up. Now they exceed Tokyo. Rates are about zero too. We are where Japan was in 1995. Except for the 100-year mortgages. Don't be surprised if they'll make an appearance though.

[1] https://homeguides.sfgate.com/longest-mortgage-7677.html

The post I was responding to said that cheap money would drive people into real estate. That's clearly not the case in Japan. Cheap money has coincided with flat home prices.

They could go higher, but they aren't.

I've read that there's also a cultural component, that people treat housing more like a consumption good ... a car, say, something that they value less the older it gets.

Part of it was regulation where properties will lose value over time, and after 30 years it is considered worthless. The value of the land may have gone up in price if you live somewhere desirable like Tokyo but the building that sits on it is considered worthless, possibly of negative value even as it costs around 1 million yen (10kUSD) to knock it down.

This was intended to promote new construction of housing, the unintended consequences is that homes are thus not built to last and home maintenance is rarely performed.

Though in recent years, there has a been a slight boom of people purchasing second homes to renovate rather than build new.

> Doomed from the moment construction begins, the average Japanese home depreciates from Day 1 — losing half its value in 10 years and becoming almost entirely worthless in 25. This depreciation comes hand in hand with the infamous mantra that a Japanese home is limited to a lifespan of 30 years and causes somewhat of a chicken-and-egg conundrum.

[0]: https://www.rethinktokyo.com/2018/06/06/depreciate-limited-l...

[1]: https://www.rethinktokyo.com/faq-secondhand-homes-renovation...

Here's a chart:

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.

Agree on being wary of everyone trying to sell a story. This is one of the things I love most about HN, though - people will often share very different thoughtful perspectives, with the sources & data to back it up.

Thanks for sharing your thoughtful perspective with the sources to back it up :)

There aren't too many experts in macroeconomics on HN, but lots of people with a story or viewpoint they want to push. I'd take most of what gets posted here with a grain of salt.

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 commented on this yesterday: https://news.ycombinator.com/item?id=23706268

"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?

Yeah if housing dropped to something sensible I'd probably move there. Which is why they'll never be sensible. :)

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...

> If you were around SF in 1999-2001, you know how fast things can change.

I was, and I remember it being specifically noted in local media shortly afterwars that while the same was not true of some parts of the Bay Area, SF did not see a decline in housing prices as a result of the bust, though it did see a temporary decline in the rate of increase.

The lack of decline in SF housing prices is deceiving. Landlords won't reduce the base rent because of rent control. Instead they'll leave units vacant or offer a few free months or $0 deposits.

So the stats might show a flatness in rental rates, but in reality there was a drop. And then as soon as the crisis is over, people want to move back and the rents start going up from that flat base rate after the incentives stop.

Housing prices can be pretty sticky. A lot of owners would rather try to ride out a downturn rather than make a sale at a depressed price.

Well to be fair the interest rates were halved during the post 9/11 / dot.com bust. Which to many, is the reason the prices didnt fall as buying power increased.

> Well to be fair the interest rates were halved during the post 9/11 / dot.com bust.

There was no “post-9/11 bust”. 9/11 happened toward the end of the 2001 recession (March-November 2001)

The post-9/11 expansion had particularly poor distributional characteristics, with, IIRC, the bottom 3 quintiles losing ground, the fourth quintile flat, and virtually all the gains in a narrow slice at the top (not just the top quintile, but the top 5% or so.)

Mission San Jose High School in Fremont is one of the most competitive high schools in California. And there's great Indian and Chinese food in the area. So as boring of a mundane subdivision landscape it is, there's plenty of reasons why Fremont will still be desirable for parents in the Bay Area.

In general, the Bay Area has great weather, sailing and skiing, international airports, and that's enough to bolster demand for the long run.

Nothing wrong with civic pride but Fremont is not even going to be listed on the top 10000 most desirable places to live in California...

Well we have <1000 cities of any type, so Fremont would definitely be on that list. :p

It depends on what you're looking for. If you're looking for access to tech jobs, immigrant community, good schools, safe, Fremont is your jam.

If you're looking for bougie restaurants, a music scene, people who want to work with you on a Burning Man project... well, you're not going to find that in Fremont.

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.

I mean, doesn't California tax you even if you live somewhere else but work in California?

If you physically work in California yes. I don't know what happens if you work for a company whose HQ is in California but you're physically in a different state.

Facebook and Google, among others, have offices outside of CA. Employees of those offices do not pay CA income tax. (They do however, for their respective states)

To expand on this:

Several of my coworkers who moved from the Bay Area still pay CA taxes for stocks that were granted before they moved, which means potentially 4 years of paying taxes for two separate states.

On the plus side, their CA tax bracket is much lower, since they don't have salary / bonus / new stock grants.

Companies setup subsidiary corporations in states employees are in if the tax situation makes sense.

This is especially true if you use an outsourced HR company like TriNet for payroll, which many startups do.

I work remotely for a company based in California. I pay no California taxes. We also have offices in other cites around the US and the world and have had remote people as a permanent feature for a while.

Would be interesting to hear the answer if anyone knows it.

There are caveats as mentioned in this thread, but in general, no you do not pay CA taxes if you live in another state and your company's HQ is in CA.

It depends on what state you're a resident of and where you do your work.

I live in MA and, when I worked in NH, I had to pay MA income taxes because I live here even though NH has no state income tax. Now I work for a company with offices in MA (even though that's not where the official HQ is) so I still pay MA taxes; doesn't matter if I'm remote or not. Were I to move to NH and work remotely, my understanding is I would then not pay state income tax (although I would if I were assigned to an MA office).

People will just transfer to satellite offices / companies will establish a presence outside of California. I'm sure at some point the CA legislature will attempt to tax any "work that has a material benefit to a California business", but that is a shaky legal argument.

After MD v Wynne, I think they'd have to give tax credits to income tax paid in other states if they tried that.

Yup, this is what happened to me this tax year, but only for stock options, not for regular income.

I work for a CA company, but remotely from the midwest (home office), and I pay CA taxes for the stock vests I got from my company last year (because I lived in CA when the grant occurred.) But I also paid taxes in my home state for the same stock. I just filed an "Other State Tax Credit" in CA (form 540 Schedule S), which effectively made CA give me a refund equal to the amount I paid in my home state. Same thing would happen if my regular salary was taxed.

It effectively means you pay the higher tax of the two states: if the state you live in has higher taxes (NY for instance), CA would have to essentially refund you all the taxes you paid; whereas if you live in a cheaper state (more likely), you effectively pay a CA income tax rate overall, since CA is keeping the remainder after refunding you for the other state.

Tech companies are Deleware businesses, though. You'd have to do something even crazier, like "a business with a significant California business."

California will not tax you if you live out of state, but if you have anything registered in CA, like you have a car registered in CA, or you own property in CA, like are a landlord, then CA will want you to pay taxes as if you live there, because the state can't identify if you live there or not.

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.

The city taxes are based upon the number of days you spend in NYC above a minimum (14-days). If you work from home from a different city / state, you won't pay city tax if you never travel to NYC.

This is just a detail. The city creates the tax so they can change it any way they want.

> This is just a detail. The city creates the tax so they can change it any way they want.

The majority of large companies are Delaware C-corps and they pay the State-specific taxes for each employee's home state and the employee's primary office location. There's no way that NYC could tax all of a company's worldwide employees who never set foot in NYC just because it has an office in NYC. Attempting or merely suggesting it would have massive consequences.

If they're going to go full cash-grab, they might as well figure out the property values that align with billionaires and structure property taxes that specifically target them. For example Bezos has a couple apartments in NYC[1] bought for about $80M. They could put a one-time %100000 property tax and demand he pay them $80B.

[1]: https://www.businessinsider.com/jeff-bezos-apartments-new-yo...

You'll still have to pay NY state taxes if you're a telecommuter, even if you do not set foot in the state.

If all the employees of a company based in NY work remotely, wouldn't the company just relocate somewhere else to make it cheaper for all the remote employees since there's no longer a need to have a HQ there?

This is a big IF. Nobody is saying that HQs will stop existing, only that they will have more remote workers.

It depends - even for WFH or agile working here in the UK, usually you have a "home base" in your contract where legally they can force you to work from should push come to shove. I'd imagine there's something similar in the US which gives them a reasonable argument to still tax those who should be in the city?

I guess a few companies will open up satellite offices in places amenable to remote works in that instance.

This is not correct. Non NYC residents with NYS source income do not pay NYC (resident) tax, But they do pay NYS tax.

See https://www1.nyc.gov/site/finance/taxes/personal-income-tax-...

I live in NJ and work in NYC. I don't need to pay the city tax. I only have to pay the state tax. Your understanding of this is inaccurate.

I just hope the fallout doesn’t “fall out” before I get a chance to move first!

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]

[1] https://ballotpedia.org/Total_state_government_expenditures

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.

No idea on the specifics.

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.

While I understand this was most likely posted in a fit of brief anger, the non-coastal areas are not a desolate wasteland.

If you rely on public transit, biking or walking then they absolutely are a desolate wasteland.

If you're relying on raising a family, property might be cheaper but often the best school, universities and opportunities are located in or close to the major coastal cities.

There might be a few 'tech oasis's' (such as Austin) but if you move or live close to those cities you'll find that CoL quickly rises with fewer benefits than living near the coast.

The “best schools” have been exposed for the scam they are under the pandemic. The schools can’t open and are providing the next few semesters of lectures through Zoom while trying to keep their prices. In turn, students are suing for lower tuition. I hope these institutions crash as they only serve as gatekeepers of career progress favoring those with money. Google’s employee performance indicators show that there is no correlation between the prestige of the school an employee graduated from and the success of the employee at the company. That lead them to ditch the college degree requirements for good.

SF's roads and highways are abysmal. I've had smoother rides on graded dirt roads. Plenty of places are doing just fine, and you don't have to worry about catching covid while trapped in a sardine can under the bay.

The two most bike-friendly cities in the US (Minneapolis and Portland) are not on or near the coast.

Any "best schools" ranking will show you that at least 7 out of the first 10 districts are not in coastal cities.

I'm not sure where you've lived before or if you have family or kids to have researched this matter seriously but the US offers a lot of choice depending on where you are in life and how you want to live it.

Discarding half the country as a "desolate wasteland" can only narrow your options in life.

Interesting. Can you give some examples of things you take for granted in a costal city that you don't get in a major non-coastal one?

what does "local infrastructure" mean here? because I know schools, for instance, are way worse in coastal cities with high taxes than, say, the midwest.

This is funny because I have found this to be the exact opposite. Utah, Florida, Texas has better infrastructure than California, New York, Massachusetts. Are some low-tax states shitholes? Yes, but there are definitely low-taxation states that are well run. It really has nothing to do with the rate of taxation (beyond a certain point), it's more about the quality of government and the priorities of where the spending should go.

You'd have to describe where in Texas you're referring to and what you mean by infrastructure, because Austin is embarrassingly bad when it comes to public transit and general walkability and Houston faces similar growing pains due to being incredibly underfunded and our state government being a shitshow.

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.

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