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There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities (or at least a lot faster than the

There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities (or at least a lot faster than they currently are). Perhaps my mentality is different than most, but if I can improve my economic situation by moving elsewhere I will. I know for some people it is difficult to move because of family ties or costs associated with moving, but I would have thought this would be a small minority of people, not the majority of them. Or are most people so rooted to where they grew up that they don’t want to leave? The other thing that confuses me is why companies aren’t moving either. It’s been a long time since a "new" city was created, but we have plenty of land available, and a lot of it is in pretty (but not natural park) locations. Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium than relocate to new or lower cost locations? Are there any examples of big companies that have relocated their HQ to lower COL locations and then failed because they couldn't attract talent to move there, or is it just conjecture that this would occur?

davidw 7y ago
> Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium that relocate to new or lower cost locations? Yes, it's pretty strong. Employers want to be where the employees are, and employees want to be somewhere where there are other jobs.
lonelappde 7y ago
They like living CA better than elsewhere, but don't want the economic profit to go to landlords who didn't create that value.
40acres 7y ago
Network effects I suppose. When this economy was based on land and natural resources it made sense to move (and subdue the native population) to open land and gain an advantage, with a service based economy it makes greater sense to cluster at population centers and leverage that. The rise of remote work will probably alleviate this a bit but education, health care, entertainment, hospitality (aka. the fastest growing sub sectors of our service economy) are more valuable when delivered in person. Not to mention fighting climate change (not to say that we're doing a particularly good job) encourages density.
- jahlove 7y ago
  I think it's more precisely referred to as "agglomeration effects" [1] [1] https://en.wikipedia.org/wiki/Economies_of_agglomeration https://en.wikipedia.org/wiki/Economies_of_agglomeration
diego 7y ago
What makes you think that people aren’t moving? Population isn’t decreasing if that’s what you mean, but the Bay Area is a revolving door. I own a condo in San Francisco, and I’ve had five different tenants in eight years.
- refurb 7y ago
  Yup. Of the 12 people from my graduating class who moved to SF, me and one other person is left after 8 years. Of course plenty more from later years offset that.
  - rconti 7y ago
    From what college? And moving into then out of SF doesn't make the bay area a revolving door. My (bay area) college class was half from CA, half from the northwest. About 50% of those from the northwest moved 'home' after school. Is that a revolving door? Did they get sick of the area? Or did they never intend to stay?
seasoup 7y ago
People don't move to a place because that place has cheap housing, otherwise people would be piling into the countryside. People move places with better economic opportunities for them and their families, generally that means jobs but it also means low crime, good schools, entertainment options and more. As for companies moving, there is good and bad about your hq being located close to other hqs and good and bad locating away, but there is generally far more good in locating together. Shared talent, shared training...
- aeternum 7y ago
  Many employees cannot or are unwilling to up and move so it is quite difficult for a company to relocate a headquarters. Companies can open a regional office elsewhere but that has its own problems with communication and distributed teams. Problems which are manageable but can require new processes and training.
- kitsunesoba 7y ago
  Exactly this. It’s also worth noting that this is true for people who are well past the “foot in the door” segment of their careers — even if one is able to move to a low CoL area thanks to remote-friendly policy at their current company, by doing so they’ll likely be locking themselves to said company for an indefinite period and greatly diminishing their chances at getting raises. Of course that doesn’t matter to everybody, but generally speaking it’s against one’s best interest to move away from the city despite savings on housing, commute, etc.
stanferder 7y ago
Just because your economic situation is unsustainable where you are doesn't mean you'd be better off someplace else. If you arrive in a new city without a job and without connections, you're in trouble from the moment you get there.
chaostheory 7y ago
We don’t know exactly why yet, but the majority of people just don’t want to move. Even in times of war or famine, only 10-20% of the population leave
dragonwriter 7y ago
> There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities The people at risk of homelessness lack the resources to move; the people with the resources to move have, on average, far less incentive to want to.
chrismcb 7y ago
A lot of tech companies might there be that is where the talent is. Talent moves there because that is where the companies are. A company did want to move to Timbuktu because there is very little talent. And if they did, talent didn't want to follow for dear of being locked in to one company. Remote work helps but isn't the answer
darwinreally 7y ago
>The other thing that confuses me is why companies aren’t moving either Company isn't a person. It can't think for itself. Here are the reasons company choose to not move: 1. The powerful executives are often the people who existed since beginning. They've had invested their compensation in the city where the company's headquarter is and now they are permanently part of the city's influencial people with ties in government, law and more. So you want them to leave and become no one in some new city? Their old connections and knowledge of the city will become worthless - they made all those connections and acquired that knowledge when they were young and now those executives might be in 40s or 50s and might not have same drive to earn all of that back They profit from rents, they profit from sale of property in the their city. They profit in lots of ways. When you acquire new talent, you recognize majority of the compensation goes towards "rent" and that rent end ups in the pocket of successful city dwellers (aka executives at the said company) When decision makers in the company benefit from this. You can't build a rival company with lower costs unless you can somehow make it run without these executives. 2. Employees will not move that easily because in big cities employment market is efficient, switching to another company is easy and most new players will he dying to snatch those freshly laid off employees.
harikb 7y ago
California, at least Bay Area in particular, has a slightly different problem that is keeping people stuck here. People can’t live here without both husband and wife working full time. Now to move to a different city or state, both husband and wife needs a job there or the new salary + cost of living must equal the other person quitting their job. That is just a difficult mental model to get over. It will happen, but only at the breaking point
- hcknwscommenter 7y ago
  Totally agree. Add in the fact that, if you do move to a lower cost area it is typically a mostly an irreversible step. You'll never save up enough to move back. By the time you change your mind, CA house prices and rent will have risen another 7% yoy, and inventory will be in the gutter because prop 13 discourages people from selling and rent control discourages people from moving. For some, that is not an issue. For me, well, I have lived here almost my whole life. I'd like the option to change my mind.
- CalRobert 7y ago
  Also, throwing your kid in a new school, giving up your friendships, etc. is not withoud downsides.
djannzjkzxn 7y ago
Relocating HQ means laying off all your employees. This is not a figure of speech or analogy, it’s literally true. You are laying off all of your employees in the current location when you move the jobs away. The question is whether those employees are going to choose to uproot themselves to go work for you at the new HQ, or stay behind and find another job. Most will stay put instead of moving away. People generally don’t take kindly to forced moves. Many ethnic groups have legendary historical calamities that consist of being forced to move en masse. If a software company did this, my guess is all development would cease for a long time and you may exceed the “bus factor” and permanently kill a large portion of projects. In fact I’m aware of management at one company winding down projects by moving the skeleton crew who agrees to leave to a lower COL city. This is not much different from outsourcing to a lower COL country.
- mnemonicsloth 7y ago
  Because of my father's job, my family moved 9 times before I was 12. It wasn't as big a deal as you're describing.
  - hcknwscommenter 7y ago
    Mine too. I hated it. It sucked. I promised myself never to do that to my kids.
  - lkbm 7y ago
    That's nice, but would I move to follow my company? Probably not. I'm pretty sure most of my coworkers wouldn't either. Would you?
jotux 7y ago
A surprisingly large number of adults live very close to their parents [1]. [1] https://source.wustl.edu/2015/12/most-americans-live-surprisingly-close-to-their-mothers/ https://source.wustl.edu/2015/12/most-americans-live-surpris...
- smsm42 7y ago
  Free babysitter? :)
  - mc3 7y ago
    Free meal maker and shirt ironer.
- usaar333 7y ago
  I'm surprised that's surprising. I always figured most people rely on grandparents for at least occasional childcare.
- triceratops 7y ago
  Ironically Prop 13 makes it more difficult for kids to afford homes near their parents.
  - harikb 7y ago
    You have it backwards. Prop 13 overall increases house prices, yes. But kids, whose parents own a home, benefit the most from Prop 13.
    - triceratops 7y ago
      Until 2018 you could inherit homes from parents or grandparents and keep the original assessed value, but that's no longer the case. So unless the kid is earning enough to pay taxes on a massively appreciated house, they're going to have to sell and/or move away. EDIT: I was wrong about this.
      - 7y ago
sigstoat 7y ago
> It’s been a long time since a "new" city was created huh? the I-25 corridor north of Denver is sprinkled with towns and such that were nothing but an intersection and a gas station 20 (15?) years ago. right now they're bedroom community type things, but they've got some big box stores. they'll keep growing. are they big cities right now? no. (was your claim very specific? nope.)
eli_gottlieb 7y ago
>Or are most people so rooted to where they grew up that they don’t want to leave? I mean, historically speaking, yeah.
usaar333 7y ago
Well, economic situation is your income less expenses. For a lot of people the Bay Area is maximizing this. But we're taking a huge social loss (as a nation) by making it so expensive to live in the area that offers the greatest opportunity.
jarjoura 7y ago
An easy example, you can make movies in other regions of the country, YouTube makes it possible, but if you want to easily hire the best people you have to go where they are concentrated. This is why being in the movie industry pulls everyone to LA. The Bay Area is a hub because it's where the industry was born. People who have deep knowledge in the industry are here. If you want to grow your startup somewhere else, you can. I think the problem is that you might eventually hit a wall as you grow. You'll need to pull in UX research, or a PM, or grow a legal team. In most places in the country, these roles just won't exist, or there won't be any domain knowledge to build them out from scratch. Also, just like the film/tv industry, tech workers want to move around a lot. Unless you're in a hub like Seattle, NYC or the Bay Area, your options to move around are limited. Remote cities can work if all the stars align or someone finds a company that lets them remote work. However, once you leave the job after 4 or 5 years, you will have to find another remote working position.
- rcpt 7y ago
  If companies could hire remote employees in low cost of living areas and remain competitive they would have done it years ago. But the effects of agglomeration are simply to great. That's why we have business clusters all over the nation - here is a map of them: https://www.clustermapping.us/content/clusters-101 https://www.clustermapping.us/content/clusters-101
timelincoln 7y ago
Charles Schwab is currently relocating their HQ from bay area to texas
dcolkitt 7y ago
Economists have studied this pretty extensively. What they've found is that every time a city doubles in size, its economic productivity goes up by around 5-7%[1]. This relationship seems to hold across a remarkable range environments. In the ancient times, in modern times, in the Renaissance, in American, in Europe, in Asia, in the first world, in the third world, and so on. This is what makes bootstrapping a new city so difficult. Let's say your economic metro has 10 million people. even if you manage to coordinate 100 thousand leaving together, the new city will still have nearly 50% lower productivity than the old mega metro. Density seems to boost productivity by making it easier to quickly spread innovations. Think about Silicon Valley. There are hundreds of tech companies in a single job market. New technologies and approaches. Employees switch companies every six months and bring the best practices to their new firms. Take those same companies and disperse them across the continental US. Workers don't move firms because relocating is expensive, unpleasant and risky. Instead of bouncing between jobs every six months, people stay "loyal" to their local employer for decades at a time. Every time a new innovation is discovered at one firm, it takes orders of magnitude longer to diffuse across the industry. Think of the major improvements in software engineering during our lifetime. Things like devOps, test driven development, microservices, rigorous source control, code review, open source, containerization, and the like. Silicon Valley adopted all of these practices years, if not decades, before the average IT department in Tulsa or Jacksonville. [1]https://www.jstor.org/stable/1885259?seq=1 https://www.jstor.org/stable/1885259?seq=1
- davidw 7y ago
  > decades Great comment, but... that's a bit of an exaggeration! The rest of us read HN and mailing lists and web sites and whatnot, and technology does tend to spread faster thanks to it, these days.
- yhoiseth 7y ago
  Good point. Somewhat higher in another study: > … in contemporary US cities productivity increases by about 11% with each doubling of their population. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609801/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609801/
nradov 7y ago
Companies don't move because those location decisions are made by wealthy senior executives who like it here. California is a great place to live if you have enough money to insulate yourself from the bad parts.
c3534l 7y ago
I looked it up and people are. California is #3 of states people are moving out of. https://www.thespruce.com/map-shows-where-people-are-moving-2435876 https://www.thespruce.com/map-shows-where-people-are-moving-... It seems like people from Silicon Valley are moving to Portland and Seattle specifically: https://www.forbes.com/special-report/2011/migration.html https://www.forbes.com/special-report/2011/migration.html Not necessarily the best or most up-to-date sources, but I'm only going to bother spending so much time on this.

davidw 7y ago

> Is there that much of a network effect with talent being in one region that companies would rather pay a 4x compensation premium that relocate to new or lower cost locations? Yes, it's pretty strong. Employers want to be where the employees are, and employees want to be somewhere where there are other jobs.

lonelappde 7y ago

They like living CA better than elsewhere, but don't want the economic profit to go to landlords who didn't create that value.

40acres 7y ago

Network effects I suppose. When this economy was based on land and natural resources it made sense to move (and subdue the native population) to open land and gain an advantage, with a service based economy it makes greater sense to cluster at population centers and leverage that. The rise of remote work will probably alleviate this a bit but education, health care, entertainment, hospitality (aka. the fastest growing sub sectors of our service economy) are more valuable when delivered in person. Not to mention fighting climate change (not to say that we're doing a particularly good job) encourages density.

jahlove 7y ago
I think it's more precisely referred to as "agglomeration effects" [1] [1] https://en.wikipedia.org/wiki/Economies_of_agglomeration https://en.wikipedia.org/wiki/Economies_of_agglomeration

diego 7y ago

What makes you think that people aren’t moving? Population isn’t decreasing if that’s what you mean, but the Bay Area is a revolving door. I own a condo in San Francisco, and I’ve had five different tenants in eight years.

refurb 7y ago
Yup. Of the 12 people from my graduating class who moved to SF, me and one other person is left after 8 years. Of course plenty more from later years offset that.
- rconti 7y ago
  From what college? And moving into then out of SF doesn't make the bay area a revolving door. My (bay area) college class was half from CA, half from the northwest. About 50% of those from the northwest moved 'home' after school. Is that a revolving door? Did they get sick of the area? Or did they never intend to stay?

seasoup 7y ago

People don't move to a place because that place has cheap housing, otherwise people would be piling into the countryside. People move places with better economic opportunities for them and their families, generally that means jobs but it also means low crime, good schools, entertainment options and more. As for companies moving, there is good and bad about your hq being located close to other hqs and good and bad locating away, but there is generally far more good in locating together. Shared talent, shared training...

aeternum 7y ago
Many employees cannot or are unwilling to up and move so it is quite difficult for a company to relocate a headquarters. Companies can open a regional office elsewhere but that has its own problems with communication and distributed teams. Problems which are manageable but can require new processes and training.
kitsunesoba 7y ago
Exactly this. It’s also worth noting that this is true for people who are well past the “foot in the door” segment of their careers — even if one is able to move to a low CoL area thanks to remote-friendly policy at their current company, by doing so they’ll likely be locking themselves to said company for an indefinite period and greatly diminishing their chances at getting raises. Of course that doesn’t matter to everybody, but generally speaking it’s against one’s best interest to move away from the city despite savings on housing, commute, etc.

stanferder 7y ago

Just because your economic situation is unsustainable where you are doesn't mean you'd be better off someplace else. If you arrive in a new city without a job and without connections, you're in trouble from the moment you get there.

chaostheory 7y ago

We don’t know exactly why yet, but the majority of people just don’t want to move. Even in times of war or famine, only 10-20% of the population leave

dragonwriter 7y ago

> There’s one thing that constantly confuses me with the housing crisis, which is why more people aren’t moving to other cities The people at risk of homelessness lack the resources to move; the people with the resources to move have, on average, far less incentive to want to.

chrismcb 7y ago

A lot of tech companies might there be that is where the talent is. Talent moves there because that is where the companies are. A company did want to move to Timbuktu because there is very little talent. And if they did, talent didn't want to follow for dear of being locked in to one company. Remote work helps but isn't the answer

darwinreally 7y ago

>The other thing that confuses me is why companies aren’t moving either Company isn't a person. It can't think for itself. Here are the reasons company choose to not move: 1. The powerful executives are often the people who existed since beginning. They've had invested their compensation in the city where the company's headquarter is and now they are permanently part of the city's influencial people with ties in government, law and more. So you want them to leave and become no one in some new city? Their old connections and knowledge of the city will become worthless - they made all those connections and acquired that knowledge when they were young and now those executives might be in 40s or 50s and might not have same drive to earn all of that back They profit from rents, they profit from sale of property in the their city. They profit in lots of ways. When you acquire new talent, you recognize majority of the compensation goes towards "rent" and that rent end ups in the pocket of successful city dwellers (aka executives at the said company) When decision makers in the company benefit from this. You can't build a rival company with lower costs unless you can somehow make it run without these executives. 2. Employees will not move that easily because in big cities employment market is efficient, switching to another company is easy and most new players will he dying to snatch those freshly laid off employees.

harikb 7y ago

California, at least Bay Area in particular, has a slightly different problem that is keeping people stuck here. People can’t live here without both husband and wife working full time. Now to move to a different city or state, both husband and wife needs a job there or the new salary + cost of living must equal the other person quitting their job. That is just a difficult mental model to get over. It will happen, but only at the breaking point

hcknwscommenter 7y ago
Totally agree. Add in the fact that, if you do move to a lower cost area it is typically a mostly an irreversible step. You'll never save up enough to move back. By the time you change your mind, CA house prices and rent will have risen another 7% yoy, and inventory will be in the gutter because prop 13 discourages people from selling and rent control discourages people from moving. For some, that is not an issue. For me, well, I have lived here almost my whole life. I'd like the option to change my mind.
CalRobert 7y ago
Also, throwing your kid in a new school, giving up your friendships, etc. is not withoud downsides.

djannzjkzxn 7y ago

Relocating HQ means laying off all your employees. This is not a figure of speech or analogy, it’s literally true. You are laying off all of your employees in the current location when you move the jobs away. The question is whether those employees are going to choose to uproot themselves to go work for you at the new HQ, or stay behind and find another job. Most will stay put instead of moving away. People generally don’t take kindly to forced moves. Many ethnic groups have legendary historical calamities that consist of being forced to move en masse. If a software company did this, my guess is all development would cease for a long time and you may exceed the “bus factor” and permanently kill a large portion of projects. In fact I’m aware of management at one company winding down projects by moving the skeleton crew who agrees to leave to a lower COL city. This is not much different from outsourcing to a lower COL country.

mnemonicsloth 7y ago
Because of my father's job, my family moved 9 times before I was 12. It wasn't as big a deal as you're describing.
- hcknwscommenter 7y ago
  Mine too. I hated it. It sucked. I promised myself never to do that to my kids.
- lkbm 7y ago
  That's nice, but would I move to follow my company? Probably not. I'm pretty sure most of my coworkers wouldn't either. Would you?

jotux 7y ago

A surprisingly large number of adults live very close to their parents [1]. [1] https://source.wustl.edu/2015/12/most-americans-live-surprisingly-close-to-their-mothers/ https://source.wustl.edu/2015/12/most-americans-live-surpris...

smsm42 7y ago
Free babysitter? :)
- mc3 7y ago
  Free meal maker and shirt ironer.
usaar333 7y ago
I'm surprised that's surprising. I always figured most people rely on grandparents for at least occasional childcare.
triceratops 7y ago
Ironically Prop 13 makes it more difficult for kids to afford homes near their parents.
- harikb 7y ago
  You have it backwards. Prop 13 overall increases house prices, yes. But kids, whose parents own a home, benefit the most from Prop 13.
  - triceratops 7y ago
    Until 2018 you could inherit homes from parents or grandparents and keep the original assessed value, but that's no longer the case. So unless the kid is earning enough to pay taxes on a massively appreciated house, they're going to have to sell and/or move away. EDIT: I was wrong about this.
    - 7y ago

sigstoat 7y ago

> It’s been a long time since a "new" city was created huh? the I-25 corridor north of Denver is sprinkled with towns and such that were nothing but an intersection and a gas station 20 (15?) years ago. right now they're bedroom community type things, but they've got some big box stores. they'll keep growing. are they big cities right now? no. (was your claim very specific? nope.)

eli_gottlieb 7y ago

>Or are most people so rooted to where they grew up that they don’t want to leave? I mean, historically speaking, yeah.

usaar333 7y ago

Well, economic situation is your income less expenses. For a lot of people the Bay Area is maximizing this. But we're taking a huge social loss (as a nation) by making it so expensive to live in the area that offers the greatest opportunity.

jarjoura 7y ago

An easy example, you can make movies in other regions of the country, YouTube makes it possible, but if you want to easily hire the best people you have to go where they are concentrated. This is why being in the movie industry pulls everyone to LA. The Bay Area is a hub because it's where the industry was born. People who have deep knowledge in the industry are here. If you want to grow your startup somewhere else, you can. I think the problem is that you might eventually hit a wall as you grow. You'll need to pull in UX research, or a PM, or grow a legal team. In most places in the country, these roles just won't exist, or there won't be any domain knowledge to build them out from scratch. Also, just like the film/tv industry, tech workers want to move around a lot. Unless you're in a hub like Seattle, NYC or the Bay Area, your options to move around are limited. Remote cities can work if all the stars align or someone finds a company that lets them remote work. However, once you leave the job after 4 or 5 years, you will have to find another remote working position.

rcpt 7y ago
If companies could hire remote employees in low cost of living areas and remain competitive they would have done it years ago. But the effects of agglomeration are simply to great. That's why we have business clusters all over the nation - here is a map of them: https://www.clustermapping.us/content/clusters-101 https://www.clustermapping.us/content/clusters-101

timelincoln 7y ago

Charles Schwab is currently relocating their HQ from bay area to texas

dcolkitt 7y ago

Economists have studied this pretty extensively. What they've found is that every time a city doubles in size, its economic productivity goes up by around 5-7%[1]. This relationship seems to hold across a remarkable range environments. In the ancient times, in modern times, in the Renaissance, in American, in Europe, in Asia, in the first world, in the third world, and so on. This is what makes bootstrapping a new city so difficult. Let's say your economic metro has 10 million people. even if you manage to coordinate 100 thousand leaving together, the new city will still have nearly 50% lower productivity than the old mega metro. Density seems to boost productivity by making it easier to quickly spread innovations. Think about Silicon Valley. There are hundreds of tech companies in a single job market. New technologies and approaches. Employees switch companies every six months and bring the best practices to their new firms. Take those same companies and disperse them across the continental US. Workers don't move firms because relocating is expensive, unpleasant and risky. Instead of bouncing between jobs every six months, people stay "loyal" to their local employer for decades at a time. Every time a new innovation is discovered at one firm, it takes orders of magnitude longer to diffuse across the industry. Think of the major improvements in software engineering during our lifetime. Things like devOps, test driven development, microservices, rigorous source control, code review, open source, containerization, and the like. Silicon Valley adopted all of these practices years, if not decades, before the average IT department in Tulsa or Jacksonville. [1]https://www.jstor.org/stable/1885259?seq=1 https://www.jstor.org/stable/1885259?seq=1

davidw 7y ago
> decades Great comment, but... that's a bit of an exaggeration! The rest of us read HN and mailing lists and web sites and whatnot, and technology does tend to spread faster thanks to it, these days.
yhoiseth 7y ago
Good point. Somewhat higher in another study: > … in contemporary US cities productivity increases by about 11% with each doubling of their population. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609801/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609801/

nradov 7y ago

Companies don't move because those location decisions are made by wealthy senior executives who like it here. California is a great place to live if you have enough money to insulate yourself from the bad parts.

c3534l 7y ago

I looked it up and people are. California is #3 of states people are moving out of. https://www.thespruce.com/map-shows-where-people-are-moving-2435876 https://www.thespruce.com/map-shows-where-people-are-moving-... It seems like people from Silicon Valley are moving to Portland and Seattle specifically: https://www.forbes.com/special-report/2011/migration.html https://www.forbes.com/special-report/2011/migration.html Not necessarily the best or most up-to-date sources, but I'm only going to bother spending so much time on this.