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San Francisco real estate going to collapse: Angel investor Calacanis
- dhuk_2018 6y agoCan't help but wonder, is this going to be like offshoring, where we thought it was a good idea, but it only works for some tasks and companies? Will we go through a phase of globalization of hiring (for remote) then pull back into onsite?
- nikivi 6y agoI would love for this to happen as it's quite a shame really how most companies still require you to move to US to work despite being a tech company. So much talent is not even considered due to archaic immigration laws of US.
- VWWHFSfQ 6y agoUSA imports more tech workers than every other country combined
- influx 6y agoIt’s miserable trying to schedule meetings between Europe and the US/Pacific time zone. Even if every is remote, being in the same time zone is everything.
- ganstyles 6y agoEven just east coast versus west coast kind of sucks and leads to inefficiency if product teams are spread across those timezones. I've done some work with west coast Europe, it's bad, 8am meetings so I can catch them at 4pm, yuck. I imagine any further than that would be horribly inefficient. We're moving to teams being able to work anywhere within +/- 1 hour of time zone.
- jmvoodoo 6y agoLatin America solves this nicely. I've done a significant amount of work with teams in central and south America. It has been fantastic. I also relocated to Puerto Rico myself at the end of March. The rise of remote work and the tax benefits here make it too good to pass up.
- ganstyles 6y agoGiven the time zone difficulties and inefficiencies it brings, I wouldn't consider hiring anyone outside of the time zones that span the Americas. Totally okay hiring someone in Brazil or Peru or whatever, but not France or Eastern Europe especially. Which sucks for me because I recently tried to hire some amazing ML engineers in Paris laid off because of covid and couldn't get them to budge on moving to my companies time zone.
- rjsw 6y agoMaybe look for people nearer the Alps, being able to ski before work is good.
- samfisher83 6y agoIts still going to be expensive. Maybe a 1000sqft house in the hood will be 800k instead of 1.2 mil.
- ryanmarsh 6y agoSo does this solve the housing crisis?
- fosk 6y agoIt’s a drug crisis.
- ldiracdelta 6y agoNot when supply is constrained by mountains and political policy and the price is set by a pair of married engineers buying a house..
- asah 6y agoMarried, childless engineers, with a couple of success startups...
- SQL2219 6y agoTo be clear - he specifically says collapse will come to commercial real estate, he also mentions 10-20% reduction in rentals/homes.
- dheera 6y agoI'm in the bay area, just moved to a new apartment, and got 6 weeks free on my rental. That's effectively about a 11.5% reduction.
- tomashertus 6y agoThat was normal even before the “apocalypse”.
- hoaie 6y agoThe rental market in Beverly Hills has already deceased 15-20%. The number of people moving out of luxury condos like 10000 Santa Monica Blvd seems extreme (30-40 available units).
- NonEUCitizen 6y agoHow much are those condos? Thanks.
- nabla9 6y agoThe assumption that economies of agglomeration just don't exist because it's possible to increase remote work seems like wishful thinking. Hopefully increased remote work eases the diseconomies of agglomeration in expensive areas like SF.
- goldcd 6y agoI think that makes sense. Always seemed strange that you wouldn't want to break the strange-hold on "setting up your company where the talent/expense" is. I'd have thought a decent model for something leaving incubation would be to almost build a campus/kibbutz somewhere nice and cheap. You're leaving education, we'll give you a nice house, a salary that leaves you better off once rent deducted - and base yourself somewhere nice. For starting out, gives you an opportunity to build up some cash. For the employer your staff are less likely to quit on you. For wherever you choose to base the company, you're providing infrastructure, young/educated tax-payers etc. Plus as people do eventually leave, they're reasonably likely to remain in the area to start their own startup.
- SpicyLemonZest 6y agoMany companies do break that strangle-hold, deciding that saving money is more important than finding good talent. It's a perfectly reasonable and very common business model. There are niches that generate $5m per year and require exactly 5 talented engineers but have no use for more; if you find one, you can just settle yourself into it and there's no reason to locate yourself based on talent availability. There are even niches where it just doesn't matter whether any of your engineers are talented. You don't hear very much about those companies on most discussion forums because they're not very exciting.
- nabla9 6y agoThat's the common sense reasoning before you start studying urban economics. The idea that you just hire good people, then place them somewhere chap but nice separated from others kills all the subtle agglomeration effects.
- dragonwriter 6y ago
- LarryMade2 6y agoThis is a short term prediction - it will be interesting to see how remote work plays out over time. I had done it a few years back and it is very disconnecting, that human interaction is important. Remote staff might be fine for a few months, but those remote people may be without local community - being a nerd in rural parts, I don't relate as much to this community as I would in a more nerd populated area. I think a lot of the dynamics of the bay area is there is a lot of competitive dynamics at play not just in your company but peers in your community, I can see where on both sides (management/staff) it can add additional stress with lack of immediate one-to-one interaction and increased distance monitoring/recording.
- dheera 6y agoAfter remote working for a while I feel like I do miss having an office and people to talk to. At the same time I enjoy having access to my fridge and furniture at home, zero commute time, and being able to be super focused with no people distractions. I think something like 3 days a week in the office + 2 days at home would be an awesome balance post-virus.
- Jugurtha 6y agoWe were ramping up our remote work as a team for the last year and experimenting because we figured we'd have to at some point, so better learn how. Of course, each individual worked from home from time to time but we shifted the focus to doing it all a once. We experimented goin the whole week, then first day of the week as a transition after the weekend. We did that to expose shortcomings: what are we unknowingly relying on physical presence to communicate? This forced us to write better and institutionalize knowledge. We also did that because our CTO was unavailable for contribution for a year, could only read emails without attachments, could not answer, and couldn't visit web pages. We shifted everything to GitLab so he could receive issues and conversations in text emails. We also did that in case money would run out and we were forced to close down the office to save on rent, and in case we wanted to hire people in other geographic locations. We didn't want to hire before having revenues from the platform and needing people to implement features actual people are requesting. Keeps the team small. We also did that to allow people to test our internal ML platform to allow people to collaborate on data projects and train/deploy models remotely using standard laptops to run jobs on beefy machines. In other words dog fooding our platform.
- generalpass 6y agoPeople and businesses may well choose to move out of the city for quality of life reasons, but the other claims he makes seem weak due to some assumptions he seems to be making: People in occupations that could work remotely have not been looking for remote work positions. Increase in demand for remote workers will not increase price paid to remote workers.
- hn_throwaway_99 6y agoOne of the things that I think rarely gets mentioned WRT remote work, especially when the "you can hire workers anywhere in the world" platitudes get bandied about. While distance may not matter as much, time zone absolutely does. I think many companies have finally realized that for software teams outsourcing to Indian and East Asia, with a colocated team in the US, is horribly inefficient. As a sometimes dev manager I refuse to manage people where one of us has to be online from 10-midnight or some nonsense like that to get a teeny window of overlap.
- cwzwarich 6y agoYou can usually find a way to make it work with any pair of timezones (e.g. North America and Europe, North America and Asia), but when you throw in a third distant timezone it becomes a huge pain. At Mozilla, we had people working on the same project in North America, Western Europe, and Australasia. The meetings alternated between inconveniencing Europe / Australasia, but the additional latency of having all 3 timezones involved in decisions really slowed things down.
- jointpdf 6y agoI worked on a ~3 month remote project with people in timezones +6 and +12 hours ahead, which is arguably the worst configuration of timezones. Yet, we indeed found a way to make it work (and in fact I have some fond memories, though I doubt it was sustainable). The worst part was the project manager insisting on daily 7am standup calls (spoiler alert: I was not actually standing for these absurd calls).
- hn_throwaway_99 6y agoYes, I agree, you can "make it work", but not without a real negative cost to efficiency and employee morale. I don't know anyone that doesn't hate that "super early or super late" time span, and it just sucks for everyone. Over time I think many of your best employees will just refuse to work those kinds of hours indefinitely if they have other options. I specifically contrast that to when I worked with some excellent devs in Brazil who were only a couple hours off and the whole project and relationship was fantastic.
- sna1l 6y agoKeep in mind a lot of people are associating remote work with "remote work during a global pandemic."
- naveen99 6y agoI have been saying real estate is not going to do well long term even before the plague. Absolutely no reason for real estate to represent > 60% of wealth in the future. Breathing the same air as someone else usually a liability, only rarely worth the risk. Once people start doing remote relationships only meeting for procreation, real estate will go to zero. Yes this might take a while, and I am not waiting for it... but it’s going to happen.
- jmvoodoo 6y agoSo, people are going to raise children over zoom? And do so without a roof over their head? Remote work certainly seems possible, and that would cause a change in real estate prices in many areas. But claiming that real estate as a whole will suddenly be worthless on any timeline seems a bit far fetched.
- naveen99 6y agoI didn’t say suddenly. Like I said, procreation requires proximity... raising children is procreation.
- dragonwriter 6y agoLocation isn't important just for procreation. There are reasons that certain places are more attractive to live than others other than that (climate, accessibility for trade goods, proximity to natural physical recreation venues, etc.) Shifts in technology may change exactly what locations are more attractive, but they won't change that some locations are more attractive and that land in attractive locations is scarce.
- naveen99 6y agoAgree. But there will definitely be a lot of losers in the locations that lose value...
- lisper 6y agoMy wife and I live in the SF Bay area and we own our primary residence. I would love to see real estate prices collapse. Why? Because we would like to do a lateral move (i.e. sell our house and buy a different one in our area for about the same price) but right now it's too expensive. The price of both our house and the one we'd want to move to have both doubled since we bought ten years ago. If we moved today we would have to pay capital gains tax and our annual property tax would nearly double. If housing prices collapsed and went back to where they were when we bought we could make the move essentially for free. That's the insidious thing about rising housing prices. In order to cash in on your gains you have to actually sell your house. But then you still have to live somewhere.
- kemiller 6y agoFYI you would not have to pay cap gains on your primary residence. But yes, I feel the same way. I’m stuck in a starter house because I couldn’t easily get back in the market.
- JPKab 6y agoReally really feel for you buddy. Your house has doubled in value and now if you sell it you have to pay capital gains tax before you can buy an equally overpriced house in San Francisco. I mean in terms of suffering you're right there with the business owners who don't know how they're going to pay their rent or their employees. oh wait no you have a completely first world problem and don't seem to be self aware about it. Or you are just humble bragging. The completely obvious thing that you could do instead would be to move to a different area after selling the house or do this crazy thing and rent. But really I empathize with your incredible wealth. Really sorry it happened to you.
- nemothekid 6y agoI think it's clear to see that corporate real estate is going through a paradigm shift. Before this crisis, I remember Stripe was having a lot of trouble finding a big enough space in SF before deciding to move to South SF. What if Stripe just didn't have a big office and expected most of their base to work from home? What isn't clear to me is what happens to residential real estate. Sure, some of us, who would prefer to live in suburbs out where it's cheaper, or maybe in comitted relationships with kids would prefer that. But I don't think the the group of people who are maybe single, or prefer the recreational aspect of living around people in a city would go away. There's a balance which isn't immediately clear to me. If more people exit the city, does this effectively reverse a lot of the gentrification we are seeing and sharply stop growth? Or if it goes the other way does the city become more exclusive for those who want to live there?
- Consultant32452 6y agoI can add an anecdata to your suggestion. I work at a fortune 500 financial company. Our CEO recently had a town hall and discussed having a total 180 about remote work. He had been against it and didn't believe it could work. Being forced into it caused him to see the proverbial light. They stopped plans to open another office in NY and would be aggressively embracing more remote work regardless of covid.
- tinyhouse 6y agoThere will always be places that are safer, more fun, better schools, etc. Proximity to work opportunities is only one factor. Also, commercial real estate can shift to co-working spaces which will have higher demand as more companies move remote (many people prefer that than working from home, esp if it's a short commute and paid by their company). I think the biggest impact would be on the suburbs as families would have more flexibility in picking where to live. We'll likely see some price drops but as he mentioned I don't think we will see dramatic price drops. Not to mention that most companies still plan to go back to the office when things reopen. Might be too early to make predictions about remote work.
- nemothekid 6y ago
- lharries 6y agoInteresting point about why does being a contractor vs employee have to be binary? Couldn't there be a third option for gig workers where employees have flexible hours with progressive benefits e.g. pension + sick days after working a certain amount
- olivermarks 6y agoCalcanis is framing this as a victory for globalization: create a global rat race to employ people all over the world in their homes, pay them less money and have them eat the costs of eating, heating etc. Many businesses already attempt to operate in this way, with massive outsourcing of just about everything. These same companies are often heavily financialized and some are zombie companies today in the current economic reality. The reality is that it takes a huge effort to get a good collaborative team of people to work together well on multiple levels. It takes even more effort to keep morale and momentum up. It only takes a few poisonous office politics players to wreck the above. You have to have a strong core and clear direction and that is much harder if remote participants have never physically met. I do think silicon valley is going to take a big economic hit for the next ten years but reinvention is synonymous with the area so it will be interesting to see what emerges next...
- dgellow 6y ago> it's interesting what you say about talent, you know, it can be found anywhere. [...] they didn't realize that they could literally find talent anywhere around the world and hire people in ways that they never even thought they could prior to covid 19. Sorry, but that exchange is complete bullshit. Nobody in 2020 believes that talents only exist in SF. Any successful company in SF has other offices around the world, so they know as a fact that talents can be found elsewhere and know how much that costs. Remote work is well known since decades by companies, they definitely knew that was a thing and decided (for the majority) to not do it while being aware that was an option. If that's the case, that you are managing a company or HR team and didn't know that was an option, I'm sorry, but you're completely clueless and shouldn't be the one allocating/managing resources.
- purplezooey 6y agoNot going to collapse. The factors that drove it up, lack of willpower to build anything, growth in workforce, not being Texas, are staying.