4 ms·

Firstly, I'm talking nationally. Secondly, the Bay Area is one of the markets subject to some of the more severe headwinds if remote work becomes the new norma

Firstly, I'm talking nationally. Secondly, the Bay Area is one of the markets subject to some of the more severe headwinds if remote work becomes the new normal, for the reasons you stated. SF population declined ~7% over the past two years. https://www.sfgate.com/bayarea/article/San-Francisco-population-decline-us-census-data-17203868.php https://www.sfgate.com/bayarea/article/San-Francisco-populat... The concept of being forced to live in a hyper local area for work may be a thing of the past, which doesn't bode well for employment driven locales. NYC being another example. Bay area is one of the last places in the country I'd want to own a home right now

vostok 4y ago
Density still has huge benefits unrelated to work. I don't know much about SF as I haven't lived there as an adult, but New York is an incredible place to live for lifestyle reasons too. It has great food, a very high concentration of smart and highly educated people, great museums, great performance arts, etc. It's also an incredibly walkable city, which is rare in the US. Hands down it would be my choice of city if I was a remote worker.
- adam_arthur 4y ago
  Price is defined on the margin. Lack of forced demand from local workers will drive prices down, unless the leisure aspect of the locale outweighs the work aspect. It's subject to debate which locales would stand to net gain/lose from WFH, but I'd pick NYC as a net loser. You gain some who enjoy the city life and amenities, but you lose more to lower COL locales. Price will always be a factor weighed alongside amenities, even if one area is objectively nicer from an amenities perspective
- lazide 4y ago
  SF only has one thing going for it really - weather. Everything else pales compared to NYC.
  - davidgay 4y ago
    > SF only has one thing going for it really - weather. This is far from an universal view - I live there (well, East Bay) and I think the weather isn't that great: too cold in summer, no nice evenings, never nice to hang out by the water. And I like cold winters as a contrast. October to December are nicer though.
    - lazide 4y ago
      Compared to NYC?
  - confidantlake 4y ago
    SF has better hills.
zamfi 4y ago
Sure, and I’m not making any claims about the future, either — just pointing out what the causes have been so far: demand/supply mismatch has had a far larger impact than speculation and interest rate policy or “narrative” on Bay Area housing prices. If demand plummets, of course prices will follow.
- lazide 4y ago
  Demand is driven by those factors you say don’t matter. That’s the point folks are trying to make. It doesn’t just magically appear.
  - zamfi 4y ago
    Demand is people moving to the Bay Area for work and needing to live somewhere, wanting to have kids, etc. It’s not driven by Fed policies around interest rates. It’s not driven by speculation. It’s driven by people wanting to own homes. Period. The other factors are small.
    - lazide 4y ago
      People always want a nicer house in a nicer area. That doesn’t create real demand on it’s own (as in anything that will impact a market). As any experienced realtor will tell you, every house is always ‘in demand’ by a near infinite amount of people that can’t afford it. They have to be able to do something about that desire in a concrete way - high salaries count of course, but it’s always modulated by interest rates unless they are buying cash outright. Then it’s usually moderated less directly by other things they can be doing with that cash that are more interesting, and relative rents in the area.
      - zamfi 4y ago
        Again, I am not saying those other factors do not matter, obviously they do. But if it was "interest rates" driving everything -- then every area would be very expensive, not just the areas where there are high salaries and lots of inflow and basically zero new construction. The Bay Area population grew 7.4% from 2010 to 2020 -- that's 614,901 residents according to census. New construction in that same time period was under 200,000 units. So: where are all those people living? Many of them are living with roommates, etc., and because of the scarcity of housing, having your own place has become a luxury that costs extra money. If 600k people are complying for 200k units, prices will go up regardless of what interest rates do. Then, salaries rise in response where they can, because tech companies need to pay enough for people to be able to move here (always more expensive, thanks to rent control and Prop. 13, than already living here) -- which then pushes home prices even higher, because there still isn't enough housing to go around, and the 30% of people who can bid the most are the ones who clear the market. (And then, of course, everyone else who isn't pulling in tech salaries is just shut out of the market.) Interest rates matter on the margin, yes, of course -- but the cost of capital is still low compared with availability. A couple making $400k combined is going to be able to bid more on a house at 3% interest than at 5% interest, but the only reason they're bidding so much at all is that there aren't enough homes to go around and they want one.
almost_usual 4y ago
> Bay area is one of the last places in the country I'd want to own a home right now I’d pick the Bay Area over anywhere else in the US, with or without remote. Judging by real estate prices after remote took off (ignoring condos) I’m guessing a lot of others feel the same way.
- paulryanrogers 4y ago
  Are you thinking resale value or quality of life? And if resale value then where will you live when you sell?
  - almost_usual 4y ago
    Quality of life

vostok 4y ago

Density still has huge benefits unrelated to work. I don't know much about SF as I haven't lived there as an adult, but New York is an incredible place to live for lifestyle reasons too. It has great food, a very high concentration of smart and highly educated people, great museums, great performance arts, etc. It's also an incredibly walkable city, which is rare in the US. Hands down it would be my choice of city if I was a remote worker.

adam_arthur 4y ago
Price is defined on the margin. Lack of forced demand from local workers will drive prices down, unless the leisure aspect of the locale outweighs the work aspect. It's subject to debate which locales would stand to net gain/lose from WFH, but I'd pick NYC as a net loser. You gain some who enjoy the city life and amenities, but you lose more to lower COL locales. Price will always be a factor weighed alongside amenities, even if one area is objectively nicer from an amenities perspective
lazide 4y ago
SF only has one thing going for it really - weather. Everything else pales compared to NYC.
- davidgay 4y ago
  > SF only has one thing going for it really - weather. This is far from an universal view - I live there (well, East Bay) and I think the weather isn't that great: too cold in summer, no nice evenings, never nice to hang out by the water. And I like cold winters as a contrast. October to December are nicer though.
  - lazide 4y ago
    Compared to NYC?
- confidantlake 4y ago
  SF has better hills.

zamfi 4y ago

Sure, and I’m not making any claims about the future, either — just pointing out what the causes have been so far: demand/supply mismatch has had a far larger impact than speculation and interest rate policy or “narrative” on Bay Area housing prices. If demand plummets, of course prices will follow.

lazide 4y ago
Demand is driven by those factors you say don’t matter. That’s the point folks are trying to make. It doesn’t just magically appear.
- zamfi 4y ago
  Demand is people moving to the Bay Area for work and needing to live somewhere, wanting to have kids, etc. It’s not driven by Fed policies around interest rates. It’s not driven by speculation. It’s driven by people wanting to own homes. Period. The other factors are small.
  - lazide 4y ago
    People always want a nicer house in a nicer area. That doesn’t create real demand on it’s own (as in anything that will impact a market). As any experienced realtor will tell you, every house is always ‘in demand’ by a near infinite amount of people that can’t afford it. They have to be able to do something about that desire in a concrete way - high salaries count of course, but it’s always modulated by interest rates unless they are buying cash outright. Then it’s usually moderated less directly by other things they can be doing with that cash that are more interesting, and relative rents in the area.
    - zamfi 4y ago
      Again, I am not saying those other factors do not matter, obviously they do. But if it was "interest rates" driving everything -- then every area would be very expensive, not just the areas where there are high salaries and lots of inflow and basically zero new construction. The Bay Area population grew 7.4% from 2010 to 2020 -- that's 614,901 residents according to census. New construction in that same time period was under 200,000 units. So: where are all those people living? Many of them are living with roommates, etc., and because of the scarcity of housing, having your own place has become a luxury that costs extra money. If 600k people are complying for 200k units, prices will go up regardless of what interest rates do. Then, salaries rise in response where they can, because tech companies need to pay enough for people to be able to move here (always more expensive, thanks to rent control and Prop. 13, than already living here) -- which then pushes home prices even higher, because there still isn't enough housing to go around, and the 30% of people who can bid the most are the ones who clear the market. (And then, of course, everyone else who isn't pulling in tech salaries is just shut out of the market.) Interest rates matter on the margin, yes, of course -- but the cost of capital is still low compared with availability. A couple making $400k combined is going to be able to bid more on a house at 3% interest than at 5% interest, but the only reason they're bidding so much at all is that there aren't enough homes to go around and they want one.

almost_usual 4y ago

> Bay area is one of the last places in the country I'd want to own a home right now I’d pick the Bay Area over anywhere else in the US, with or without remote. Judging by real estate prices after remote took off (ignoring condos) I’m guessing a lot of others feel the same way.

paulryanrogers 4y ago
Are you thinking resale value or quality of life? And if resale value then where will you live when you sell?
- almost_usual 4y ago
  Quality of life