It's not "doom and gloom" to say that when there are examples of it happening before.
San Francisco's tax base is leaving. What do you think is going to happen?
Rent wise, San Francisco will just be Anytown, USA with a little bit of scarcity due to plethora of rent control and old tenants with grandfathered in low property tax due to state law.
City better balance its budget.
For one thing, they'll tax the remaining taxpayers until they move or die.
[1] https://www.bayareamarketreports.com/trend/san-francisco-hom...
yes, to them it seems like a lot of business
evictions and foreclosures have barely started in San Francisco and will be completely backlogged
nationwide: a few hundred thousand people playing around with low interests rates, millions of people pending default
like I said, scarcity and views will continue to help San Francisco prices as it has for the last 170 years, but it can also become like those midatlantic satires of civilization.
So much culture left sf to Oakland due to cost. As SF rent gets cheaper, I suspect we’ll see art, food, and activism jobs come back.
Of course, sensible landlords are in short supply; a lot of amateur landlords do seem to see it as a magic money tree.
IMO, that's completely dependent on how much SF tech companies embrace remote work.
It also depends on whether those who move away from (or would potentially have moved to) the Bay Area come back, especially if prices are a bit less eye-watering. Which to some degree depends on how badly restaurants, bars, retail, etc. are ultimately hit.
And just what the attitude towards urban living generally is. (This applies more specifically to SF than the Bay Area as a whole.) The urban inflow among college educated young professionals is only about 20 years old. No reason it couldn't reverse again.
The thing is though, there are huge shifts going on in how finance operates today and how it will be going forward in the future…
A lot of things that most people in various societies have not questioned for long time are being brought into the forefront of awareness because of the pandemic, but arguably have developing for many years now and have become the reality for people at the margins of various societies.
I assume they: 1) know for sure they can wfh permanently, 2) are betting they will be able to wfh permanently or 3) are willing to quit when asked to come back to the office.
On the other hand, some destinations like Tahoe probably are good investments no matter which way WFH goes. As I understand it, that was an area that didn't really feel the previous housing crisis in 2008 either. And many buyers from the Bay Area may easily imagine they would hold their new mountain home even if they later move back to the city, whether as a low occupancy vacation home or to try to operate a rental...
They simply moved money from their brokerage account into the home.
The mortgage, if any, was small to them and is completely serviceable as they were saving for a mere downpayment on a SF or peninsula home, minimum downpayments are often 20% of the home value which would be close to $400,000 of $2,000,000. You typically want to reduce interest payments by putting larger percentages down.
They can sell the houses whenever they want and not lose anything or much. Its a store of value that also puts a roof over their head without having to pay someone else every month.
Seems like they’ll be forced to adopt remote first whether they like it or not. No company is going to be able to lay off half its workforce. The labor market for software engineers and most other professionals is still extremely tight. Until it’s otherwise, the workers are essentially in charge, and management will mostly have to accommodate.
High performer who is hard to replace? Sure, we’ll be flexible.
Low performer with 10 people lined up, ready to take the role? If you’re not in the office on Monday, you’ll be fired.
And the thing that gets me is some of the booming housing markets are far away from jobs. Tahoe for example. If you can’t work from home, it’s unlikely you’ll find another job locally.
Who knows, maybe all these folks thought all this through and took the risk eyes wide open?
That’s the situation now, but after 1000 remote tech workers move there and 500 decide not to go back to the city, 100 might pivot to lifestyle startups that employ 100-200 more. And now you have a little incubator that wasn’t there before and might grow a nice little self-sustaining eco-system. And once it gets going, it can always rely on the nice geography to attract some talent, even if the cities become huge employment centers again.
In a way, I think this would be a very healthy development for these tourist towns. They are too dependent on tourism, and even when they were prosperous before Covid, they had issues with high property prices (due to empty second homes and Airbnb) and low service wages. Having a healthy middle class independent of tourism would be great for their economic stability.
If so, that’s great and we could see some pretty interesting changes to the demographics of small cities.
If they don’t have a plan B, well... that’s not good.
Work has been pretty cagey about what post-pandemic is going to look like. Nobody is outright saying we’re 100% coming back to office or we’re definitely going optional WFH forever. It’s this uncertain “wait and see” that keeps us from pulling the trigger on Tahoe or Redding or somewhere else way out there and less expensive.
If they ever make a clear decision: “WFH is optional for all employees” we put our house for sale that day.
And, while I don't think people buying houses outside of commuting range did it for this reason, it is a clear signal that, if forced back to an office for other than sometimes trips, they'll leave.
Now, of course, you are betting to some degree that remote work will continue to be sufficiently popular that you can switch jobs if need be. But the concentration of a certain type of job in the Bay Area actually isn't that representative of job density in general.
I suspect that they may be incorrect, here.
I’m curious why you’d think that? It will be over a year before many workplaces are in a position to end the WFH policies. A year is a long time, enough for cultures to adapt.
* edit: I mean over a year from the start of WFH policies in March-April of this year.
I may be biased; personally I can’t wait to be back in an office.
The market dynamics shifted. No big deal.
“Wild that tenants having to deal with rent going up and having to negotiate a commercial transaction is “grim””.
“The market dynamics shifted. No big deal.”
No, but the people on the opposite side of the transaction (the landlords) for damn sure do. "Market price has gone up, what can you do" is something I've been told when trying to negotiate lease renewals, and I'm outside the Bay Area.
Landlords could, as a group, have pushed to help make pricing stable and make their investment a long-term, very secure asset. Instead, just like virtually every other part of this fire-encrusted economy, they grabbed for the short-term gains at the expense of plodding consistency. Landlord groups are pushing back on the idea that tenants should do anything except blithely pay whatever duly-increased price is passed onto us and we should thank them for the privilege besides.
My heart bleeds.
The only reason it’s dropping is because of Covid. How could they have avoided a mass exodus due to a pandemic?
Could landlords have completely forestalled people leaving? No. Could they, as a group, have done a lot more to actually agitate for--versus opposing--things like new housing to keep market prices stable (rather than a hockey stick) and worked with tenant groups to aim for a tenancy system that balances each group's needs more directly, rather than "rent consumes almost all available resources?" Yes.
Had landlords tried to work in concert with the people who provide the source of income for landlords, rather the opposing them at almost every turn, the "exodus" might be a rather expected "trickle."
They made their bed of housing scarcity in these possibly-former-hot markets...they can lie in it.
But screw her right?
Eat the loss, move on -- that's what most landlords would tell their tenants in the opposite situation.
I am playing the world's smallest violin for them as a class.