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Comment by notherthrowaway | Hacker News Reader

I think people are asking the wrong questions. We know that people moving back in with their parents is up about 3 million due to COVID [1]. It would follow that studio apartments are the mostly likely to be rented by those same young people, thus the demand has dried up.

The question we aren't asking is, what happens when the economy recovers and these people move out of their parent's homes? Will they go back to the "destination" cities or will newer, smaller cities be the target? Will they crave experiences or space more?

[1] https://www.marketplace.org/2020/07/28/millions-of-americans...

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My guess as to what will happen, for the sake of playing along with the hypothetical simply because it’s fun.

Destination cities will still be desirable, however there will be a very slow rebuilding of demand. The magnitude of that demand will never reach the same height. The entire world was forced to work from home for an extended period of time, introducing those from industries that would scoff at the idea to a different lifestyle. Sure some people don’t like it, they will be the ones moving back to cities, but I think enough find it vastly favorable to the grind of commuting too and from a physical office that it will have some stickiness once social distancing can safely be stopped.

This general shift in attitude will make it far more realistic to work where you actually in your heart of hearts want to live. I’m excited for this change, I live in downtown San Francisco right now and it’s not BAD— life is fine, we’re making due with the times. But I never wanted to permanently live here, and now there is this perfect chance to move out of the city, you bet your ass I’m taking it when my lease is up :)

> The magnitude of that demand will never reach the same height.

I don't believe this; very few companies are okay with permanent remote work after the pandemic is over, even though they are very notable exceptions, eg Facebook.

This also assumes the population of people interested in living in destination cities is constant, but it's been growing every year the last decade except this one. COVID and the possibilities of remote work and COVID will dampen growth, but when we get through COVID, I expect demand to be higher than ever. It's not like SF will solve their systemic housing problems in the next 20 years, or our lifetimes.

I work in oil and gas, by no means the epicenter of innovation and many of these companies are talking about a moving to a mostly remote work force to save on real estate expenses.

I don't buy the "cost savings" narrative.

By a long shot, the largest expense for large companies in employee salaries - rent, by comparison, is a drop in the bucket. What follows is that companies should be most concerned about employee and team productivity rather then office expenses.

Salaries do get affected by WFH policies, since if you move to a cheaper state/country, a company will often do a pay adjustment. So, from a cost savings perspective, it becomes a question of how much a company thinks being in the Bay Area brings in terms of attracting talent, vs how much they can save by having their employees work from Pennsylvania or Canada or India.

I know companies in Canada that are way ahead of the curve on this: they've been consulting for American companies for years, meaning they can afford way more person hours than american counterparts given a US dollar contract size solely because of the salary gap difference.

I am skeptical that the labor market for high quality tech talent is as large in the rest of the country or that it is that tied to COL. The US vs not US gap seems much larger than the HCOL vs LCOL for senior IC jobs.

Maybe not 10 months ago, but a lot of people have dispersed to various places in the US, and that may continue as companies relax their in-person work requirements. Talent still has its concentration points, but its less concentrated than it was, and I expect that trend to continue.

The US vs. not-US gap is certainly larger, but I expect that US-based companies would much rather hire someone 3 timezones away than 8 or 12. Having to be on conference calls at 7am or 8pm gets old real quick.

Do you know of any remote-first tech company that pays Bay Area salaries regardless of location?

I haven’t heard of one, and I would think this would be a huge selling point so anyone doing it would want to advertise it to engineers.

On the other hand there are plenty of companies transparent about their policy to match pay to cost of living, for instance gitlab publishes their conversion percentages for different cities. Many places in the US they pay ~60% of Bay Area.

There's like a $25k difference between Google L4 in the Bay vs in Boulder and with considerably less average years of experience. That's less than the COL difference.

https://www.levels.fyi/comp.html?track=Software%20Engineer&s...

> companies should be most concerned about employee and team productivity rather then office expenses.

Can companies measure productivity of knowledge workers to that granularity?

Office expenses make a relatively small fraction of employee overall expenses. Say 10% to be extremely generous. NYC five-borough average back in 2015 was around $15K per year [1]. A fully-burdened employee expense is around 2X base salary, so a $100K salary position clocks in around $200K fully-burdened, or around 7.5% of that 2015 NYC average figure. I don't currently see companies wholesale changing employment strategies for 10% differentials.

I'm not sure companies can measure productivity down to that expense detail level for knowledge workers.

[1] https://www.marketwatch.com/story/heres-how-much-your-compan...

True, but if giving up that office also means you're more amenable to hiring employees in LCoL areas for 30% less, then you start to see some savings. Ditto if some of your existing employees move somewhere cheaper and you cut their pay a bit.

It seems like this argument is easily dismissed when you look at the push away from offices and cubicles into cramped tables with no visual separation. Fitting more people into less space has been the trend for a while, despite study after study demonstrating that it’s less productive.

It's very difficult for a corporation to measure changes in employee or team productivity in many white collar professions ..specifically software development.

I personally don't know of any large corporations that track it well enough on a corporation wide level to be able to tell you if any change significantly affected developer productivity.

But the check they write every month for rent is very easily measured and reduced.

Also I was specifically told by the VP who was in charge of making the decision for his division why he was doing it, and it was costs savings.

Many of my friends who own large companies are explicitly saying they will never rent offices again. As a founder/CEO this is an obvious move.

It's also possible that after the pandemic, when it's an option again, the youngest employees will prefer to work in offices. Won't the talent drive their choice ultimately?

I'd imagine that a group of employees who already work well together moving to remote work would be very different than hiring/training/integrating new remote employees.

Different, yes, but nowhere near as difficult as I expected. We've continued to hire a lot over the past 7 months, and while onboarding people remotely took longer at first, I'm not really seeing meaningful productivity differences (due to the remote onboarding) after a month or two on the job.

Is it an obvious move? I can work from home, and currently do, but much prefer working in an office. I'm more productive when I'm in the office. It's easier to get into and stay in a more focused headspace. There's also a lot of relevant context and info that I pick up just by being around the office that I don't have when working remotely.

There are many people who feel differently. Which is enough to change the market significantly since real estate prices are highly demand-elastic.

I'm aware that there are people who feel differently than I do. However, I believe there are a reasonable number of people on both sides of this. That's why I don't think going completely remote is an obvious move. Not having offices will eliminate some people from the applicant pool. Not offering remote positions will eliminate other people from the applicant pool. It's okay for a company to do either of these but I don't agree that the choice to go remote only is obvious.

==This general shift in attitude will make it far more realistic to work where you actually in your heart of hearts want to live.==

Will young people suddenly not want to live in close proximity to other young people? Will that become another luxury item for the well-connected?

I don’t think it needs to be so absolutely black and white. I just mean, if you lived somewhere for reasons other than “I enjoy living here” you’re likely going to have options that didn’t previously exist.

Some will want to stay in proximity to the young people they already know.

The ones that want that already do.

All of them? Your response suggests that.

I’d counter that many young people permanently leave their “hometown” for financial opportunities that are currently only available away from that “hometown”.

For privileged young folks who are “amenity migrants”, your statement would be admittedly true. It might be a bit classist to extend that assumption to all young people.

I'm not convinced that most people will want to move back to their hometown after being away for any non-trivial amount of time. I certainly wouldn't. My old high school friends are different people who I don't know anymore (save for a few who who I'm still close with, who coincidentally also don't live in our hometown and wouldn't move back). My friends are mostly people I've met in my new town, and I wouldn't want to leave them without good reason.

Sure, people who grew up in $COOL_PLACE but moved to $OTHER_PLACE for a job might want to (and be able to) move back to $COOL_PLACE now, but I don't think that generalizes to most of America.

WFH is fine. Bothers me not at all. I hate not being able to breathe the same air as my friends. It makes so many things impossible - things that are also impossible unless my friends mostly live within 30 minutes travel of me.

Have you made your last friend or could you make different ones if you moved somewhere else?

Moving to a rural area is even worse. In principle I can maintain friendships with people separated by any distance from me, but there's no substitute for being in a highly populated area in terms of making new friends. And the more highly populated the better.

I think the last friend I made by first meeting them in person was in the early 90's - people I knew from my home town.

Every one since then was someone I knew online for many years first.

The magnitude of that demand will never reach the same height.

The US is expected to add 80m people in the next 30 years. So that seems very unlikely, even if there is a shift in behavior.

Edit: reduced the population estimate with newer numbers from the census bureau.

But those 100m are going to grow up in a world where remote working is the norm.

Even during the lockdowns only 40% of the US workforce worked from home. Here’s another stat: only 33% of the us population has a bachelors degree or higher.

Step out of your bubble and think about all of the people making the goods you order, maintaining your roads, construction workers that fix your home, the workers at the grocery store, the person that delivers your packages, the warehouse workers, etc etc etc.

The world runs on people being physically present working jobs that can’t be done from home... that must continue so that you CAN work from home. Until robots can do those jobs, it'll always be the minority that works from home.

Vast majority of those jobs don’t rely on the network effects of major SF/NY/Seatle hubs. There’s little difference To prospects to someone working as a plumber in a town of 30k people vs a city of 3m people.

Sure, but you need a lot more plumbers in a city of 3M people than you do in a town of 30k. And those plumbers create demand for housing.

> Vast majority of those jobs don’t rely on the network effects of major SF/NY/Seatle hubs.

If you reduce the need to maintain both a worksite for people and a home, while you will increase the need for labor to maintain/service the home and supporting infrastructure somewwhat, it will probably be less than the reduced demand for labor to maintain and service the worksite. The initial effects of a large scale shift to telecommuting is going to include a lot of net physical service/maintenance/support jobs lost.

"only 40%"

Step out of your bubble and think about what it would mean if 40% of Americans worked from home full time.

It can be done, we've seen that, now people are running the numbers and seeing what that means. Pre-covid it was something like 3% that worked from home at least half the time.

If 3% turns into 40% - or even 20% or 6% - that starts to change things.

If remote was the best (most profitable) way to do things, companies would've figured this out well before COVID.

Not saying wfh is as productive as in office, but the tech stack needed to make wfh work became available only very recently. Skype didn't cut it.

I would flag github as a more crucial requirement. We've had various im/irq platforms for decades. They weren't really a substitute for video - but video is only a tiny fraction of team communications, and simple chat satisfies most of those requirements.

You're thinking too small. A tiny fraction of the people in the US use GitHub. Even a relatively small fraction (certainly under 50%) can use Zoom to do their jobs.

Remote collaboration tools like GH have been crucial for remote work for software developers, but that's a really small slice of the pie.

Even at companies that employ software developers, many don't use GitHub specifically or don't use much. And most of the sales, marketing, finance people at those companies don't use GitHub much either. Many of the developers I know were collaborating on open source projects around the world before GitHub came along so it's hardly a prereq.

Instead of github you should say code repositories. We used subversion back in the earlier 2000s to do remote work with contractors. It worked just as good as GitHub for remote collaboration.

This assumes that companies are always operating in a maximally efficient way. Anyone who has worked in a corporate setting, particularly for a large corporation, knows this is never the case. Far too often, things are done one way because that's the way its always been done.

A small fraction of those 100m are going to be working in corporate jobs where WFH is even an option. Retail workers, trade workers, transportation workers.

The whole WFH discussion is an upper-middle class discussion. Low income workers don't have the option of working from home.

>> The magnitude of that demand will never reach the same height.

Growth of cities and the increase of wealth of cities is 5,000 year trend, that includes in its history pandemics and plagues.

People really do need to zoom out a little bit. Yes, we may see negative or slow growth in some cities over the next couple years, but in 50 years? I would bet NYC, SF, and other big cities will be stronger than ever.

.. except there will probably be more pandemics within the next 50 years.

Given that we've had multiple localized epidemics or global pandemics in the last two decades alone (SARS, Ebola, Swine Flu/H1N1, etc), the likelihood of more seems increasingly high. Perhaps it doesn't even matter whether the next one will have a higher CFR; whether large cities prosper depends not only on whether people believe it will, but also on how well the cities do in many other respects, such as crime, taxes, pollution, trash, homelessness, etc. SF is not only suffering because of the pandemic: the pandemic just put an extra sense of urgency on the snowball effect that was already happening.

When cities are safe, healthy, clean and beautiful, they're great and everyone is happy to live there, but now? Not so much.

Are suburbs any different? I’ve visited at least a dozen suburban areas during the current pandemic and they are all as equally affected by the pandemic as cities are.

It’s important to note also that sanitation, preparedness, and scientific knowledge will all continue to improve over time. Pandemics may become more common but that doesn’t necessarily mean that they will be as deadly or effective as the current one.

How much of that history includes jobs that can be done remotely? I'd say that's a significant change for certain cities that have a significant such workforce.

Agreed. What has happened in the last 75 years is historically new:

1. The growth of information/knowledge (the Information Age) jobs, which are now the majority of all jobs in the U.S.

2. The growth of remote work tools (the jury is out on how productive people are remotely at the moment, but new tech will drive this soon so that you will be just as or almost as effective in your kitchen or local coffee shop)

3. The growth of global transportation (the Jet Age) that allows previously localized diseases to spread globally in hours, instead of months or years

These factors are new and together likely presage a historic shift in how and where people work.

Ironically, except for this market adjustment in larger cities, the ability for people to work productively in other locations will put continuing downward pressure on the cost of living in cities as people leave, and probably hit some sort of equilibrium at some point soon.

... all this to mean that you should sell your investment properties in the Tenderloin ;)

I would argue that high paying jobs are a big driver of cities and never in human history have people had the ability to work in high paying jobs outside of big cities like we do now. The ability to effectively work remotely is largely dependent on job duties and IT in general can work remotely with little productivity loss. Hence the bay area getting hit harder than most.

To me the question is whether companies/employees will continue letting/wanting to work remotely in the future. I am certainly not concerned about a population collapse in big cities because many companies and people want to live there and don't because of cost.

Who are you talking about? Tech workers or people who don’t work in tech?

Everyone I know in the service industry left. I doubt they ever come back. COVID was the nail in the coffin for most bars, restaurants, and clubs in SF that were already struggling. The city isn’t going to be the same after this.

Even if all of them go bust this year, there will be new ones once population return and will need entertainment. The nature of entertainment might change a bit, but it will be still there.

Yeah, I’ll add that demand hasn’t gone anywhere, in fact, it’s higher than ever.

When things fully reopen there’s gonna be a sort of boom in entertainment/restaurant/travel industry

I think there's an implicit assumption here that there will be a definite end date to this. I really hope there is, but there's another possibility that looks more likely as time goes on: lockdown has permanently broken the brains of some types of political leader and they will in fact never fully release the restrictions. Places like SF and NY will have long term restrictions lasting years, justified in the name of public health, the "new normal" and epidemic curves that never flatten (given current testing levels the curve can never drop to zero just due to FPs alone).

Many parts of the US will definitely go back to normal, but maybe not everywhere. It may be a permanent structural change in laws and government approaches.

Yeah sometimes I think that too. I just don't think people will put up with it. They'll vote in anti lockdown politicians. I hope so anyway.

If trump wins, then who knows.

I'm curious if this will ever end either. For example, my understanding is...

30% of people will never take a vaccine [0]

The first couple vaccines will be 40-60% effective [1]

Similar vaccines never exceed 70% effectiveness. [2]

It's unclear how many boosters you'll need, etc.

I hope someone out there is crunching the numbers and seeing the issue.

[0] https://news.gallup.com/poll/317018/one-three-americans-not-... [1] https://www.npr.org/sections/health-shots/2020/09/12/9119879... [2] https://www.cdc.gov/flu/vaccines-work/vaccineeffect.htm

I think the answer to that question depends entirely on the employer. While some are making waves becoming remote companies, the vast majority are chomping at the bit to get butts in seats. I know several people who have been called back in, to sit in an enclosed office in their cubicle for 8 hours a day with their mask on doing the same exact task that could be accomplished on their laptop at home.

Why? No reason at all beyond managers wanting to see people physically in the office working. The management class rarely takes a page from science and reason when making decisions, gut feelings are king, and the gut feeling in many boardrooms right now is that people are slacking off working from home. Whether that is true or not in real world productivity isn't considered. That's why I think not much will change ultimately once things do eventually return to normal, whenever that may be. People will go right back to living conveniently to work.

Care to share the actual names of who these several companies are, requiring workers to take on the additional COVID risk with no actual business requirement? The companies, not the people. Not to be skeptical, but I will be. Government, small business, big corporations?

After reading a lot of replies in this thread, I think people are thinking way too small. As another commenter points out, we need to zoom out quite a bit more.

SF, for example, was a popular place to live before it was a tech hub. Even if all the companies go away (they won't), there will still be plenty of demand. Maybe it will be a healthier sort of demand that doesn't push lower-income residents out of their homes. But there will still be demand, and it will grow as COVID becomes further behind us.

For a lot of the people who moved back in with their parents, I think social circles will be an important factor. I know if I'd moved away, I'd be anxious to see my friends again, and live close to them. That doesn't mean everyone will end up back where they started, but some will. Others might band together and pick a new, smaller city or town to live in. Some social circles won't get back together, and some will split into new combinations. Some might see it as an opportunity to move to a new city where some old friends have lived for years. Still others might decide to stay with their parents, especially if they're older and may not be around much longer.

Also consider that only something like 30% or 40% of the workforce has been working from home during COVID. Everyone else works in restaurants, bars, state and local government agencies, retail and grocery stores, hospitals, universities, and a host of other things that require a physical presence everywhere. There's no "grocery hub" like there's a "tech hub" or "entertainment hub". Every city and town needs a hospital or clinic and people to staff it, telemedicine notwithstanding. Those professions will continue to grow with the US's population, which will drive more demand everywhere, including cities.

IMO, there is a certain younger generation with an affinity for urban life. As they age, they will, to some degree, lose that affinity for urban life. I think there's a chance that cities will lose their appeal for a while.

Combine that with companies pushing more remote work, or setting up satellite offices, and you may see a slight decline in urban areas for a few years until it is in fashion again.

Everyone is on the remote work bandwagon right now because there's no adjustment in pay at the moment. For people with little or no ties in the area, it makes sense to move back home and save on rent. As far as I know, no company, other than GitLab, has published any clear numbers on COL adjustment, I suspect many will come back once COL adjustment is known (not necessarily back to SF, but to the Bay Area).

Wonder if 80+ US Senators would be willing to extend employment discrimination law to include place of residency? It would be in the economic interest of 40 US States (just a guess), and the long-term political interest of companies with National presence or aspirations, to do so...

Those factors are real, but they apply to dozens of big cities.

They don't explain why rents in SF are falling more than anywhere else.

To be fair, the article only says 31% is the most. If other cities are around 29-30%, forget what I said.

Bay area rents rose far higher and far faster than most other places. So they had the furthest to fall.

Also being Silicon Valley, they have more companies than average that were well positioned to wfh. And with high rents, people are more likely to live in a smaller apartment, making wfh even more uncomfortable... making them even more likely to want to leave.

Rent surveys are usually heavily biased towards large buildings. SF has a ton of new development in currently moribund neighborhoods, so I suspect some of the massive drop is due to that being oversampled (Mission Bay, for instance). In the more desirable neighborhoods with lots of rent controlled places the price drops likely aren't as steep. My friend is trying to rent a condo in a desirable location and most people looking at it are moving within San Francisco, trying to get into the more established neighborhoods at a better price.

They will go where the biggest salaries are, as they always did.

Not everyone follows that strategy! I certainly never have.

Not every single individual all the time, but mass of people generally moves that way. I dont mean it in derogatory "they are all shallow consumerist" way.

1.) There are too many people who dont have strong preference and thus go for salary because why not. Or follow friends. The higher salaries also go with bigger social status, often better negotiating position. There are people who do need money. And yes, there are many people who measure worth in salary too.

2.) Historically, people move that way. When programming turned out to be good job, students started to be way more interested in that. When you look at which majors students pick, they generally go for the ones that sound practical and earn money. Yes, some people go for antropology or history of art, but not nearly as many of them.

People moved to San Francisco in the first place because they followed opportunities. People moved out of Detroit because they followed opportunities.

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