6 ms·

> I wonder whether this trend will reverse in the next 1-3 years or this is the new permanent dynamic of the SF rental market. IMO, that's completely dependent

> I wonder whether this trend will reverse in the next 1-3 years or this is the new permanent dynamic of the SF rental market. IMO, that's completely dependent on how much SF tech companies embrace remote work.

ghaff 6y ago
And others, like in finance. 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.
- cinquemb 6y ago
  > And others, like in finance. 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.
refurb 6y ago
What confuses me is the home buying far outside urban areas. I understand that people will be working from home for 12 months, but buying a home an expensive transaction. If forced to go back to the office, these folks are looking at very long commute. 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.
- rsynnott 6y ago
  I think a lot of people _are_ assuming that the dynamic has permanently changed, and that WFH will be the default, or at least way more common, in their sector from now on. I suspect that they may be incorrect, here.
  - pbourke 6y ago
    > 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.
    - rsynnott 6y ago
      This assumes that wfh actually works out well for productivity, employee retention, etc. I don’t think it’s clear that that’s the case. I may be biased; personally I can’t wait to be back in an office.
      - bcrosby95 6y ago
        For retention it's hard to say. But so far the productivity numbers I've seen from a few companies range from slightly positive to slightly negative. Single digit percentage changes either way.
- ghaff 6y ago
  Some companies have made statements. Others like mine, a lot of people were remote already. So, in some cases, it seems a pretty safe bet. 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.
- dcolkitt 6y ago
  Isn’t this a case of the expectation creating the outcome. If half the employees bought homes outside commuting distance, what can the company do? 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.
  - ghaff 6y ago
    This hits on one of the reasons why permanent remote vs. return to office is sometimes a contentious topic. In sufficient numbers, those in an area like tech who favor remote-mostly effectively have veto power over an aggressive return to in-person. 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.
  - refurb 6y ago
    It depends on the roll obviously, but I can see a company saying “hey everyone, 6 months from now we’ll all be in the office” and then deal with those who push back on an individual basis. 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?
    - 205guy 6y ago
      > Tahoe for example. If you can’t work from home, it’s unlikely you’ll find another job locally. 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.
- saltcured 6y ago
  I wonder whether some still assume that the real estate will mostly appreciate, and that they can liquidate later if things change? They may not consider that a reversal of WFH might drop those markets again and leave them feeling like today's SF landlords? 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...
- claydavisss 6y ago
  If companies have adapted to WFH, why would they ask productive remote employees to quit?
- vmception 6y ago
  protip: many SF residents can completely afford homes far outside urban areas. 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.
- asdff 6y ago
  The real answer is a lot of people tolerate an awful hour plus one way commute if it means having a bigger house in a better school district.

ghaff 6y ago

And others, like in finance. 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.

cinquemb 6y ago
> And others, like in finance. 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.

refurb 6y ago

What confuses me is the home buying far outside urban areas. I understand that people will be working from home for 12 months, but buying a home an expensive transaction. If forced to go back to the office, these folks are looking at very long commute. 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.

rsynnott 6y ago
I think a lot of people _are_ assuming that the dynamic has permanently changed, and that WFH will be the default, or at least way more common, in their sector from now on. I suspect that they may be incorrect, here.
- pbourke 6y ago
  > 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.
  - rsynnott 6y ago
    This assumes that wfh actually works out well for productivity, employee retention, etc. I don’t think it’s clear that that’s the case. I may be biased; personally I can’t wait to be back in an office.
    - bcrosby95 6y ago
      For retention it's hard to say. But so far the productivity numbers I've seen from a few companies range from slightly positive to slightly negative. Single digit percentage changes either way.
ghaff 6y ago
Some companies have made statements. Others like mine, a lot of people were remote already. So, in some cases, it seems a pretty safe bet. 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.
dcolkitt 6y ago
Isn’t this a case of the expectation creating the outcome. If half the employees bought homes outside commuting distance, what can the company do? 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.
- ghaff 6y ago
  This hits on one of the reasons why permanent remote vs. return to office is sometimes a contentious topic. In sufficient numbers, those in an area like tech who favor remote-mostly effectively have veto power over an aggressive return to in-person. 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.
- refurb 6y ago
  It depends on the roll obviously, but I can see a company saying “hey everyone, 6 months from now we’ll all be in the office” and then deal with those who push back on an individual basis. 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?
  - 205guy 6y ago
    > Tahoe for example. If you can’t work from home, it’s unlikely you’ll find another job locally. 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.
saltcured 6y ago
I wonder whether some still assume that the real estate will mostly appreciate, and that they can liquidate later if things change? They may not consider that a reversal of WFH might drop those markets again and leave them feeling like today's SF landlords? 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...
claydavisss 6y ago
If companies have adapted to WFH, why would they ask productive remote employees to quit?
vmception 6y ago
protip: many SF residents can completely afford homes far outside urban areas. 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.
asdff 6y ago
The real answer is a lot of people tolerate an awful hour plus one way commute if it means having a bigger house in a better school district.