Are the Work-from-Home-Folks Moving to Cheaper Pastures?
By Wolf Richter for WOLF STREET.
In the most expensive rental markets in the US, rents are declining, and did so even in May which normally is a fairly strong month for rents. And there may be some reasons. Zumper in its June rent report:
“It seems the pandemic has shifted the demand for apartments away from the most expensive cities, since usually demand picks up as we head into summer, but now the opposite is true. As more and more companies move into remote work, many renters don’t want to pay the big city price tag when they are unable to use the amenities and are looking for more affordable options outside of large, metropolitan areas.”
An anecdote in support of this theory fell into my lap the other day when I was talking with a guy from Google’s ad sales division who wanted to get me excited about spending money on Google ads. In the call, he said that he was working from home, like most Googlers, and that he’d moved from the San Francisco Bay Area back to St. Louis, now that he doesn’t need to be near the office in Redwood City. He wasn’t alone apparently, and landlords with vacancies are adjusting by cutting their asking rents.
San Francisco remains the most expensive rental market in the US – though there are zip codes in Manhattan and Los Angeles that are even more expensive than the most expensive zip code in San Francisco. But it’s less expensive than it was.
In May, the median asking rent for a one-bedroom apartment in San Francisco dropped 2.6% from April, to $3,360, according to Zumper data. This produced a 9.2% drop from May last year, its largest year-over-year drop in the data that took it back the March 2017.
Peak rent in San Francisco had been in October 2015. 1-BR rents had edged past that in June 2019 by $50 for just one month, but have since dropped 9.7%.
San Francisco’s median two-bedroom asking rents never got back to their peak in October 2015 ($5,000): In May, it fell 1.8% from April, to $4,420, is down 6.4% year-over-year, and down 11.6% from the peak in October 2015.
The data is collected by Zumper from over 1 million active listings, including Multiple Listings Service (MLS), of apartments-for-rent in apartment buildings, including new construction, in the 100 largest markets. Not included are single-family houses, condos for rent, rooms, efficiency apartments, and apartments with three or more bedrooms.
“Median” means half the advertised rents are higher, and half are lower. “Asking rent” – the advertised rent – is a measure of the current market. It is not a measure of rents long-term tenants have been paying.
That rents can drop for years in San Francisco, despite the widely held belief that rents never drop, is shown in the long-term chart of Q1 asking rents emailed by Patrick Carlisle, Chief Market Analyst San Francisco Bay Area, at Compass: During the Dotcom bust, average annual asking rents in apartment buildings fell 25% from the peak in 2001 to the bottom in 2004. It took till 2012 before it surpassed by a visible margin the 2001 level.
Note the 5% dip of the average annual asking rent following the Financial Crisis, and the 8% dip from Q1 2016 (this chart does not show Q4 2015 when the actual peak occurred), before the “Trump bump” kicked in. Q1 2020 was still below Q1 2016, and so far this year, rents have fallen further:
In Los Angeles, in San Diego, in New York City, and other expensive rental markets, rents also dropped in May from April. This has added to the weakness in those rental markets.
The table below shows the 16 most expensive major rental markets in the US by median asking rents. The shaded area shows their respective peaks and changes from those peaks, which has turned into a sea of red ink.
Chicago and Honolulu are on top of that group, with declines-from-peak of over 20% for 1-BR apartments and of over 30% for 2-BR apartments. Seattle, once a red-hot market, is also awash in red ink. As is Denver. And Miami.
The Cities with the biggest percentage declines in 1-BR rents
The table below shows the 25 cities, among the top 100 rental markets, that had the biggest percentage declines in asking rents for 1-BR apartments in May year-over-year. What’s particularly interesting is the appearance of listings from the oil patch, including Tulsa, Baton Rouge, and Houston, but also markets in the Dallas-Fort Worth metro, such as Fort Worth and Plano:>
|3||San Francisco, CA||$3,360||-9.2%|
|9||Baton Rouge, LA||$780||-7.1%|
|11||Salt Lake City, UT||$1,000||-6.5%|
|12||San Antonio, TX||$870||-5.4%|
|15||Santa Ana, CA||$1,690||-5.1%|
|19||Los Angeles, CA||$2,170||-3.6%|
|20||Fort Worth, TX||$1,060||-3.6%|
The Cities with biggest percentage increases in 1-BR rents.
Yes, rents are surging elsewhere. The table below shows the 25 cities with the largest rent increases among the top 100 rental markets, of which 16 booked double-digit rent increases, and seven booked rent increases of 15% or more, which comes as a massive shock to people who experience these types of rent increases:
|2||Des Moines, IA||$940||16.0%|
|6||St Louis, MO||$910||15.2%|
|19||Colorado Springs, CO||$990||8.8%|
Of the top 100 cities, in terms of 1-BR apartments, 49 cities experienced year-over-year rent increases. In 11 cities, rents remained flat. And in 39 cities, rents fell. This would indicate that across the US, 1-BR asking rents would be up just a tad from a year ago.
Below is the entire list of Zumper’s top 100 most expensive major rental markets, in order of 1-BR asking rents in May, with year-over-year percent changes. Median 1-BR rents in the $600 range exist in the US, in some nice cities too, including my former home town Tulsa, but you have to go to the bottom of the list to find them. You can use your browser’s search function to find a city (if your smartphone clips the table on the right – there should be six columns – hold your device in landscape position):
|City||1-BR||Y/Y %||2-BR||Y/Y %|
|1||San Francisco, CA||$3,360||-9.2%||$4,420||-6.4%|
|2||New York, NY||$2,950||-1.0%||$3,220||-2.4%|
|4||San Jose, CA||$2,420||-0.4%||$2,950||1.0%|
|7||Los Angeles, CA||$2,170||-3.6%||$2,980||-1.7%|
|9||San Diego, CA||$1,770||3.5%||$2,300||-1.3%|
|11||Santa Ana, CA||$1,690||-5.1%||$2,200||0.9%|
|12||Fort Lauderdale, FL||$1,650||1.9%||$2,150||2.9%|
|15||Long Beach, CA||$1,570||1.9%||$2,000||0.0%|
|21||New Orleans, LA||$1,400||-2.1%||$1,600||4.6%|
|34||St Petersburg, FL||$1,170||6.4%||$1,580||-0.6%|
|45||Fort Worth, TX||$1,060||-3.6%||$1,310||0.0%|
|51||Salt Lake City, UT||$1,000||-6.5%||$1,270||-7.3%|
|51||Virginia Beach, VA||$1,000||-2.0%||$1,240||1.6%|
|54||Colorado Springs, CO||$990||8.8%||$1,220||4.3%|
|58||Las Vegas, NV||$970||-2.0%||$1,200||4.3%|
|60||Des Moines, IA||$940||16.0%||$990||15.1%|
|62||Kansas City, MO||$930||-2.1%||$1,080||-0.9%|
|65||St Louis, MO||$910||15.2%||$1,230||7.0%|
|71||San Antonio, TX||$870||-5.4%||$1,090||-5.2%|
|73||Corpus Christi, TX||$850||-1.2%||$1,070||0.9%|
|80||Winston Salem, NC||$810||5.2%||$860||3.6%|
|85||Baton Rouge, LA||$780||-7.1%||$900||-6.3%|
|88||Oklahoma City, OK||$750||2.7%||$900||-1.1%|
|96||El Paso, TX||$660||4.8%||$800||5.3%|
“I’ve stopped defining worst-case scenarios because they keep getting worse every week”: San Francisco’s controller. Read… San Francisco, Epitome of the “Everything Bubble,” Faces Fiscal Chaos. Boom-and-Bust, Always. Now is the Bust
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The American Dream is quickly turning into the American Nightmare.
“The Mass Psychology of Fascism” by Wilhelm Reich.
Just read that US police were created to police southern planation labor and later to enforce Jim Crow laws. If true it explains a lot. And begs the question: do we even need police?
spoken like true communist
Communists had secret police all over the place. I think you mean “libertarian” or “anarchist” -they’re the ones that don’t want strong governments.
RepubAnon, Joe did say “TRUE communist”.
Police organizations are the definition of socialist.
They are run by a government and are composed of union labor that largely organize themselves.
The same goes for fire departments.
Defundthe police is a great
idea . Let’s start in Baltimore and Chicago and see which has a higher number of murders .
I read an Am History Degree at Cal in the early 90s, and remember reading (in a social history class…) that early Republic policing started with the rapid rise in the size of NY-NY, and other growing E Coast cities, which brought about the first examples of paid, “organized,” police forces. The first cops refused to wear uniforms, as the uniform had been deeply tainted by its uses as a symbol of what was considered the illegitimate authority of the Brit Crown…
“I don’t need no stinking uniform…”
According to Wikipedia, the first city police in the US were in Philly in 1751, but sheriff predates city police and was widely used in England, which was the model for US police structure. Sounds like your source is dubious?
And are you really asking why we need law enforcement? I assume this is sarcasm? We need law enforcement as long as we have people who violate the law. For a taste of no policing, try Somalia.
Maybe, but….no doubt someone will say that if he had not been buying cigarettes, they would have had no excuse to come and execute him. So maybe it’s really a “Tobacco Riot” more to do with overall frustration than starvation. Bear in mind that after getting a little more freedom for sex, drugs, and rock ‘n roll, the whole quite revolution of the ’60’s just faded like a bad trip on acid. It took an oil embargo to get people pissed again….all because it crimped their style.
Stocks to the moon though! America f*^%k yeah!
Who cares about society collapse when your 401k is about to be the 802k!
The world loves dollars. They can’t get enough of them! That is our #1 export
Time for another handy dandy “Fed gave Wall Street ONLY X billions of free money last week” article. Those animal spirits folks do such hard work for us all.
Everyone needs money. Thats why it’s called money. You can be a perma-bear or you can get yours too.
…or you can be patient, and wait for the inevitable crash while owning PMs, and shorting this doomed rally.
If it were practical to show off their homes, many would want to move out to more calm areas. A second wave may prompt more to seek better places to raise children.
The latest violence, including the new police violence which will fan more reprisal protesting, will just keep this anger going and feed the coronavirus pandemic. Thus, our economy is going to go down more as businesses will have to close or remain closed longer: the only hope is that all of those persons (including even news reporters and cameramen) not wearing masks will not catch coronavirus due to the heat and sunlight killing the virus.
We will see if this approach results in the majority of people later rallying to anyone promising order via harsh measures or running away from such a person. Whatever happens now, these encounters are likely to result at least in the survival of coronavirus strains which may bloom when colder weather arrives in the fall or winter.
The innocent, uninvolved businesses in areas surrounding these riots or protests will be financially crushed if they have to close again or remain closed for longer periods due to more clusters. As with the events in January when more drastic measures to lock down the country, mandated masks, and tracing then quarantining the infected would have prevented most infections, calming words now might prevent more infections and allow the economy to recover sooner.
What I’ve heard is that remote work, especially if you move out of the area would now more likely see an adjustment in salary. Facebook made that one public, but there are other companies in the bay area that have done this for years, mainly in the pharma industry that I’m aware of, but also in others.
The real question is how easily does one trade away career mobility by moving to these other cities. That’s one other consideration that may not be thought of, it is easier to jump from job to job in a major metropolitan, but move out to Redding, CA for example, then the ability to move might not be as easy. Sure, you can still work remote, but there is going to be a change.
By the way, this still doesn’t change the fact that places like SF are going to see major rent drops because let’s face it, earthquake hazard, out of control homeless problems, high cost of living, and now periodic riots (excuse me, peaceful protests), these are all going to be factors in thinking about one’s living situation.
The key to getting ahead is hard work and personal relationships (networking).
Networking and building lasting relationships has to be done face to face at some point or it really doesn’t take hold.
I agree, and that’s what I think makes these remote working thing so darn hard. If you don’t form the relationships with the people internally, it will get difficult, if you happen to work for Uber for example and work away from office in some place nice and real remote, suddenly you get laid off, then, it’s difficult to go from your nice little house in Coos Bay, OR to suddenly land another job at a major tech company, not impossible, but difficult.
I can’t imagine what it must feel like for those who only now started to work from home… I only started 5 years ago… and now there is way more supply of companies looking for people who can work remote and have experience with doing so.
My dad in the 90’s started to work from home when P&G outsourced a lot of their tech to india (which bit them in the ass…) and then sold his division to HP, where he then got “pooched” to work as a remote contractor for BT and similar companies…
Sure won’t get promoted, but makes more than he did when in an office… and as long as those companies have people on staff more worried about getting a promotion than being competent, they’ll continue to pay him top dollar for his services… going on almost 30 years now, id say he feel pretty secure.
Most companies will stagger work from home with office time. Smaller office serving entire workforce with attendance on different days. If your commute is say 3 days a week, you may or may not move further out.
The social, economic and political systems require a rotorotor.
Anectodal info is masqueraded as Powellspeak.The economic data is screaming dump.
See you in August.
“See you in August.”
August is after the 4 month Fed unemployment ($2400 a month on top of state benes) & after a lot of the mortgage forbearance periods end. Plus (virtually nonexistent) summer travel will be over.
My daughter works for AAI Victoria .. several members of staff work from home ..
“No one has seen them for ages”
“We are not sure , they could also have another job”
I’m not saying anything bad here .. okay.
My son Andrew works for VOCUS & he loves working from home .. he lives in the suburb of Ivanhoe .. he runs in the morning .. great places for coffee & eats .. the library is a great place to work from .. the kids attend Ivanhoe Grammar = quality time with them .. & his friends are there.
Great is the operative word here !!
Speaking as a global remote worker, you couldn’t be more wrong. Proper exploitation of social media apps and establishing connections is key. Skype/Zoom with London in the morning, Maryland in the afternoon, San Fransisco in the evening….it’s how business is done in the 21st century.
You know this sounds like a Ring Central commercial I hear on KCBS, is it basically Ring Central time where you are?
Seriously though, this may be why people are so up into AR and VR. But certain amount of work still has to be done on site, manufacturing (yes, there is still some), lab work, etc, you can’t get away from that. And I am pretty sure that your company wouldn’t want to outfit your garage with a wet lab.
The way of getting ahead is to invest everything you own in the markets as you know the FED has your back…no more, no less.
Reality 101 in this new world…..
So last century
So I am guessing that there would be a market in San Francisco to sublet your closet to a Facebook Employee so they can keep that high priced mailing address? Say AirClosetRental.com?
Or would taxes outweigh any savings?
This. I was gonna say something similar.
Isn’t it kinda early to assume working from home will continue, or even grow, past CCP19? More likely, alot of people have been considering moving for awhile, because, of the increasingly crazy cost of living. It’s possible that, many employers don’t know their employees moved. If I was paid based on where I lived. I could share a studio apartment near nyc with 9 other people, not live there, and collect more money from an employer, sign me up; especially, as most people are paid through direct deposit.
This whole never need to go to the office ever, but, pay is based on where you live idea, won’t last.
It’s possible that making that big city money, for some time even after you left the city, will make moving far easier. Odds are alot will be either laid off or “demoted” in name only and have to accept lower pay after the CCP19 saga simmers down and employers find out, the employee may still come out ahead quite often though in the case of pay downgrade. The question is what percent would come back?
Interesting points. When we hire contractors to work remote for us in IT we don’t adjust what we pay for the hourly rate based on where they live. As for employee’s they have to tell our payroll department where they live as their state tax, where applicable, has to be deducted from their pay check.
However, what’s to stop someone being hired for say Facebook that temporarily lives in a HCOL area then moves 6 months later to a tax free state LCOL area? Would the employer then give them a pay cut?
There are several studies that show working at home increases productivity. A remote workforce enables an employer to outsource their real estate costs to employees. A net plus for employers. The big factor holding remote working back was managers needing to see “butts in the seat”. After the Sars-Cov2 pandemic, upper management are seeing the detailed analytics they get on worker activity. A fully remote work force is here to stay for most occupations. Think of the impact that will have on the commercial RE market
Another thing I forget to add is; that if you work remotely and your pay is based on where you live, I would probably move to a more expensive location, for real “not just a mailing address”. Not LA or NYC expensive, but, significantly more expensive than I currently live.
Even, if I got paid the same no matter where I lived in America “the common sense way”. I would probably end up moving somewhere more expensive, again not LA expensive. So in the end alot of big not super big cities might pop up like 200,000 people across America “if well laid out, would be my preference”.
Of course, if I worked remotely, it would be tempting, assuming pay is not based on location, but, in America. I might put down my parents or a siblings house down as my address, and move across the world. I might settle down for a while, though, in a particular place. As long as the internet is fast, my employer may be, not the wiser.
In order to prevent jobs being outsourced to another country, America would have to have a requirement that most jobs to available to Americans for at least 60 days, before it can be given to someone else. In order to give it to someone else, the offer for Americans, would have to be highly visible and pay the average, in America wage. Alot of protections would be needed.
Working from home, will still probably cause massive job losses, and because the population is more mobile. The healthcare situation, would be even more complicated. If you currently get healthcare from your employer for one city, but, live in another, this might have convince older, but not, younger people to put down real address. The healthcare system will implode soon, because of aging boomers, and needs to be replaced with a dramatically different system.
I don’t get it. Why would a Facebook employee need to keep a high priced mailing address?
Some employers are paying employees a salary that varies based on the cost of living, where you live. So basically, some people, right now claim to live in LA and thus get paid more, but, actually live somewhere cheaper. To trick your employer, you will need a real address that mail can be sent to, for stuff like tax forms. However, you don’t actually live there.
VC are still on Sand Hill Road. Unless that changes, your dot comm will need to be within a short drive.
In such a mobile society, once work from anywhere becomes more prevalent, what happens if you move between one high cost of living are a to a low cost and back to a high cost area? Would companies resort to a “headquarters/non-headquarters” pay structure. Are they going to ask for your utility bill to constantly verify your location? At some point internal pay equity does become a problem if you are an HR director.
By the way mocking protesters as rioters in general is the same as declaring ACAB, all cops are bastards right? It’s easy to blithely joke about real grievances, if one is sitting in a privileged home, location, financial situation that leaves you immune from racism.
Hint… not mocking the protesters, I’m mocking our news media and our politicians for generally being unable to distinguish the two and differentiating them.
Legitimate protests need to happen. Riots do not.
I’m pretty sure you can segregate those out who riot vs those who actually protest, since in general protesters aren’t carrying a bunch of loot home at the end of their protest.
Oh my. Redding, CA. 125 degrees in the summer. All the homeless of SF and none of the charm. The wildfires and smoke are a bonus though. I know a certain type of people loves the place. I am related to a few. Your average freelancer? I doubt it.
The rush to the hinterlands hysteria is being overestimated. I have seen too many flee urban and coastal CA only to recognize their terrible mistake when it was too late.
You get what you pay for. Just get a roomy or six.
The choice isn’t SF vs Redding. It’s SF vs Portland or Denver or Austin or Phoenix or Boise. And most of us who have made that move don’t regret it. SF is only livable for the wealthy.
Nothing says social justice like looting a Footlocker.
So…do he make the sale?
“An anecdote in support of this theory fell into my lap the other day when I was talking with a guy from Google’s ad sales division who wanted to get me excited about spending money on Google ads.”
It’s ok, he is used to it. :)
The life of a sales guy is getting told 95% to 99% of the time on cold calls. You probably know that as well as anyone, Wolf.
And you had the advantage of people coming to you because they wanted cars.
This kind of data is deflationary and scares the hell out of the FED. A good old Austrian School of Economics deflationary bust followed with an inflationary melt up death of fiat is un-speakable inside the moral void of the marbled insular halls of the FED. M2 velocity is dead , M2 supply is going up.I hope I live to see the FED Brothel of Fiat die.
I hope so too, but if the money fails the Government will be close behind, I guess. It is a consummation to be wished, indeed, but who will pay for my Social Security? Do you think I should prepare to do some Work?
Work? During the Second Great Depression?
The latest figures will not be released until June 5th but it’s very likely that U-6 unemployment is already at 30% and going to be at 40% soon. Good luck getting a job.
All that money has been printed recently has mostly gone to those people that already have money and not to the unemployed or to smaller businesses. Even if I agreed with the possibility of hyperinflation the relatively small group of people who still have money cannot spend enough to create large scale inflation.
So, unless Congress actually passes legislation to give money directly to households for a number of months, it’s nothing but unemployment and deflation for the next few years.
Only if you want to work a horrid, minimum wage crap job as Walmart greeter or the like Better off expatriating to a sane place where you can actually live without all the stress and drama in my opinion anyway
I want a part-time work-from-home job as a Walmart greeter.
There are no more WM greeters. Job was eliminated.
“if the money fails the Government will be close behind”. First , only gold is money and cannot fail ,all else is debt or fiat paper and will fail. Second,The price of gold is at $1740 not due to gold increasing in value . The Dollar has decreased in value from around $35 per ounce of gold in 1971 to $1740. Money ,(gold) has not failed the fiat currency , (dollar) has failed by minus 98%. The last 2% rests on the only asset all fiat has, faith. That last 2% contains a shit storm of disaster.
If the money fails and the Gov goes down next, there won’t be any jobs to be had.
M2 velocity must have been falling for what – 10 yrs so?
Because ZIRP and QE – and that didn’t “scare the hell out of the Fed” in fact the Fedsters did victory labs, wrote books how Godsmacking Awesome they were and bragging they were fantastically brilliant on The TV and such.
Yup, it’s been falling but it hasn’t been at 1.37 till recently Not sure how bad that makes things but the chart looks horrible frankly
Wow it looks like US currency is being vacuumed up as soon as it gets in the hands of the American consumer. Where is it going savings?
Why are rents surging in Detroit Michigan of all places?
With auto purchases plummeting the whole state economy must be in free fall. As far as I know Michigan’s economy is still tied at the hip to the auto sector.
“Why are rents surging in Detroit Michigan of all places?”
Just guessing… Detroit downtown has been revitalized and is considered really cool at the moment. Check it out! Also rents are still incredibly low, compared to other places.
Really cool until a fire starts?just asking.
Detroit even has its own arson holiday, “Devils Night” on the night before Halloween.
Unfortunately my parents wouldn’t let me participate as a kid growing up in the D.
Supply and demand in Detroit area. Lived there 60 years. Very few apartments built due to zoning and high taxes with high property crime in Detroit.
My automotive engineer nephew sold his house in Detroit (cool neighbourhood) last month. It took about 1 week and he got what was asked by RE agent. Where is he now? Out in the country working from home, dealing with people all over the World for his multi-national parts company, while his kids ride bikes on the driveway and nearby roads. (no traffic).
Lots of work from home types moved there because it is cheap. They are gentrifying the old buildings and “loft living” for very little money. Lots of artists, writers, and techies.
Detroit is actually a great place to host data centers, mostly cold, major airport, lots of space, and cheap.
The days of cheap gentrification of old buildings are long over.
Permits, fees, inspections are now required even in small towns.
Asbestos and lead paint remediation is very expensive.
The asking rents once renovated are never cheap.
Did you notice how low rents are in Detroit, even with the “surge”? The city has lost about 1 million people since the 1960 census. It remains a very dangerous place to live, when measured by murders per 100,000 population.
What’s happening with condo rentals in SF?
Is there an increase in the number for rent and are there incentives being offered or asking rents being reduced?
I’m thinking these would have been most of the AirBNB/VRBO housing stock and it would be nice to know whether they are transitioning to long term rentals.
You touched upon a big point that is not reflected in this data — or in much of the other data. If condos are purchased for investment purposes, they’re expensive to carry (HOA fees, etc.). So they’re rented out, Airbnb or long-term. If the Airbnb business collapses, as it has, the owners are going to have to switch and find long-term tenants or sell the unit. They just want to cover their costs. They can be aggressive in pricing the rent. All these are higher-end. So they put downward pressure on everything that is below. This is in part why rents are moving so much faster than home prices.
There’s a whole class of workers that have become nomadic due to the economics of housing. Airline workers are in this group, along with techies.
I got the impression many are accustomed to living in temporary accommodations in multiple locations, like Airbnbs. This could be another bunch of renters gone. Now that they are not working, they may all have disappeared into mom’s basement.
The strength of the American economy is the mobility of it’s workforce. (A.G.)
If the condos were purchased the past few years, the prices paid were probably sky high? Peak of the everything bubble? Unless the Superhost put down a solid down payment they might not be able to rent it out for the monthly carrying costs. I suppose coming out of pocket for a while might be better than losing the property (if things turn around in a year or two.)
I remember those posts a couple of years ago about the crazy construction boom in SF on high end condos, (crazy here is a relative term). I wonder how many of those are still on the open market, and when prices will get lowered enough for some of these to be turned to affordable housing. I think that’s almost a necessity given the state of SF right now and the increasing amount of risks associated with living in the bay area in general.
Only when the social revolution occurs will we capture the political and economic sclerotic systems. Our economic, accounting, political figurines are as active as as a massive pulmonary or brain stroke to our vascular system.
We can neither think or provide the necessary oxygenated blood to our vital organs anymore. The solution is radical surgery or the patient dies.
If the American experiment is to continue we need a transfusion but more importantly we need a surgeon then treatment, then rehab and finally exercise.
Translation: throw out the established political parties but find a Washington, a Lincoln, a FDR for the 21st Century. It is our time and we must demand him or her. Once the leader is selected we must have constant vigilance and determine if our elective representatives meet the American spirit of renewal. If the answer is is yes, we continue but if not we need another system.
Think I’ve lost the “feel” for the current real estate pulse with Covid happening, because I live in what might be “Goldilocks” land – a half urban/half settng (in other words suburban) with well spaced yards and generously built split level ranches….(and I swore at age 35 the Queen Ann Victorian painted Lady I lived in in Boston would the house I die in, too much maintenance – so much for that)…
I’m in-between the urban one might want to flee, and the now more desired far flung less expensive remote suburban but not yet county bumpkin land. So I experienced no greater effort than usual, in finding a new tenant when my previous of 2 yrs recently move to Oregon just before Covid.
Shorter version: I really don’t know what’s going with rent up or down right now.
Excellent use of data, as usual, Wolf.
Considering that rent/mortgage pmts are by far the biggest household expenditures, hopefully this post might pick up some major media (well, bigger media) coverage.
Zumper and others are providing a major service by collecting this data monthly.
To appreciate the true insanity of SF/NYC type rents, everyone should remember that they have to be paid in after tax (Fed, state, and sometimes city) dollars…so gross up for that $40k per yr 1 bedroom in SF.
US median *household* income (2 earners)…about $62k.
(Higher, but not that much, in SF)
Equals $52K per yr post tax in CA.
Net out $40k for your 1 bedroom rent and you have about $12K for *everything* else.
For a year.
Insanity. Unsustainable insanity.
Driven by vanishing point interest rate policy and the resultant rampant RE speculation.
But according to the G/MMT’ers, every dollar saver in the universe should be eternally ZIRP’ed in order to perpetually re-fellate high leverage RE insanity…because…economics or something…
Just found out that tech companies actually have a name for getting-the-hell-out-SF…de-location.
Zapier compensated employees to leave…and once company de-located, new employee applications went up 50%
There is a large population of good candidates smart enough to stay far away from peak rent sh*t storms.
If you de-locate from San Fran’s gilded tech islands say to Spill Corn North Carolina ( it’s real) that’s just great. It won’t take the Jack and Great Zuck to realize that the I.T. Concentration camps of India will be much cheaper. We humans have more power when we are in a common physical locale acting together. You are a nobody in the virtual world.
“We humans have more power when we are in a common physical locale acting together.”
Tell it to C19.
“On the Internet no one can tell you’re a dog.”
McLuhan called it the “mass audience”, and it precludes the marriage of entertainment and politics. A mass audience doesn’t need a majority or a preponderance of viewers, sheer numbers are cancelled out by a smaller more passionate group of base followers. Nobody goes to a rock concert to boo Mick Jagger. Criticism is irrelevant. Celebrity is self endowed, while stoicism and sacrifice are counter productive. Hollywood stars were once surrogates for our fantasies. MM could do things the rest of us could only dream of doing. The mass audience is a surrogacy for that. The new secular reality has removed the need for passionate intensity. The process is then taken offstage, where a small group of actors does and says things that most of would not think of doing.
so sad – to bad – we don’t care
I like my market – one of low cost $700 for 1 bedroom(chart above)
I get $700 for 2 bedroom units – must be measuring rich area’s
good for me – I have LOTS OF ROOM TO RAISE RENTS
and will continue to do so until I hit stablization
now that EVICTION COURT IS OPEN – I gave notice to tenant
and MAGICALLY HE HAS some $$ – so I’ll put him on short leash and evict if he doesn’t come thru
then I can RAISE RENTS TO MARKET – higher of course
Portland rents are flat according to the chart but they will be diving soon. I pass by hundreds of newly completed but totally empty apartment units on a daily basis. These units are sitting in suspended animation waiting to really impact the market, but about August 1st thousands more renters will hit the end of the no evictions period and head back to Nebraska or wherever. The carnage in the investment rental space will be truly epic.
How will this play out in Opportunity Zones? Especially for private equity investors who have already invested in them?
Denver renter working at home here. Would LOVE to move to a cheaper city and work remote as I have been priced out of the market here. LL has kept me at 2010 rent due to being a good renter. If that changes, a similar one bedroom from a new LL would be at least 55% of my take home. The mountains are pretty, but they’re not that pretty.
Check the bottom of the list. Tulsa is pretty, by the Arkansas River, hilly. You can drive to the mountains, no problem. We used to do it. Leave Friday night at 6 pm and arrive in Crested Butte at noon Saturday. I was a lot younger then and crazier, and we took turns driving. Pretty drive too, especially once you get into the higher Plains and the mesas. Paved road to Kenton, which is near the NM state line. Then a gravel road for a while. But we usually got there early enough to get a mountain bike ride in before dark.
You can also go up to I-70 and then head west, straight to Denver. I think it takes longer and is a lot more boring.
I live in Los Angeles. Speaking of Tulsa, you inspire me to visit our relatives in Sacramento and then visit Crater Lake in Oregon. Stay strong..,
Are you still bullish on living in SF?
I guess it’s still a pleasant place if you’re not in the middle of the parts that are in decay.
I’d imagine SF has gone through similar waves in the 60s , 80s , 00s. Then it bounces back because heck, it’s still one of the most dynamic cities in the US (economic, weather, geography)
Everyone who has been around for a while knew a bust was coming — we just didn’t know THE bust was coming. Back in 2016, it was already happening, until suddenly the Trump bump kicked in and gave the local bubble a huge boost, which lasted until early 2019. So this bust is going to be interesting. The booms and busts and all the chaos — up and down — that comes with them are part of SF. We’re not leaving. We love living here.
“We travel all over this country wide,
Playing music by the hour.
Always wear this great big smile,
We never do look sour.
Take me back to Tulsa, I’m too young to marry”
– Bob Wills / Tommy Duncan
These days? Take me back to Tulsa, my rent’s too much to carry.
Thanks, that’s good advice. Reminds me that I always had more fun in Colorado when I came to visit before I lived here.
Also looking at Wyoming and South Dakota, neither of which are on the list. :)
Albuquerque, NM has plenty of mountains, both the Sandias/Manzanos in the area as well as the Sangre’s up in the northern parts of the state.
Weather’s fairly mild — doesn’t really get that cold, not much snow in the winter, and maybe peaks around 105F at the end of June.
You can cut your rent by 30% and keep the mountain view in CO Springs.
All depends on what you value. Lots of smaller cities far from the ocean and mountains that are very affordable. It’s a balance of amenities and weather and what your interests are.
Due to COvid-19, I am able to spend time with my wife and kids for the last several weeks. This is such a blessing in disguise.
Thanks for the info. Nice platform for info for info at no cost for you, except your time and work. I think I like the bottom ten cities for price. My sister has recovered, took five weeks. Gleaned some info out there that China has the masks, no contact purchases, alypay, also heat sensors and tracking (phones) to contain the virus.
1) Rent is down, there is chaos in the streets, but the Nasdaq100
is moving up.
2) MLK was assassinated on Apr 1968. Bobby was assassinated on June 1968. And Vietnam. Chaos ruled the streets.
Chicago strong man mayor Daley wasn’t able to control protesters and rioters, during the Dem convention, but the DOW kept moving up, beyond Nov 1968 election, until Dec 68.
The DOW reached a lower high @ 994.65, slightly below 1001.11
from the Feb 1966 peak.
3) After a “Law & Order” president took over, the Dow plunged to
627.46 on May 1970.
4) In the next 12 years, until Aug 1982, chaos & decay chewed up US
economy and our major cities RE.
Engel; your fortune-cookie talking points, while amusing, are utterly useless without historical context. Context is everything; the future is unknowable.
Interesting. History is frequently a guide to the future. If nothing else, can’t see any good coming out of this. Who’s going to want to live in the intercity now.
The fact people are so easily moving residences shows that “quarantine” in the United States Of America is just a word.
No matter what your political beliefs are, human lives should never be something to easily discard in the pursuit of them.
I think rents in major cities that are flooded with AirBnB’s are going to crash so hard. For example, San Diego, thousands upon thousands of rentals for Long Term Tenants went off the market for AirBmB, the rents became insane, now all those units sit empty, even if AirBnB starts up again, travel will be very slow to start and won’t match what it was just few months ago. Mix in the 45 Million unemployed, yikes. As a renter, I’m keeping my fingers crossed.
I don’t get the AirBnb implosion thing. I have 2 reservations this summer for airbnbs, I haven’t cancelled either and have no intention to do so. I don’t see why anyone would cancel. Even if you’re afraid of the big bad Rona boogieman, why would you cancel a vacation over it? You’re no less safe in a beach home somewhere than you are at your home. Going to Costco is 100X more “dangerous” than going to the beach. And yet everyone is packing Costcos without blinking an eye.
Also, now we’re at 45M unemployed? Not quite. First off the number you’re thinking of is more like 37M, which is the number of people who filed since the Rona started. But it’s a false premise. You don’t just keep counting the number of UE claims and keep that as a running total of unemployed people. If this were true we’d have more unemployed people than citizens at some point. Every week as people file, other people go back to work. You have to look at the net change in employment, not just the new additions to unemployment.
Whatever the number is, it has been falling steadily since early April. And the vast majority of those unemployed are low wage workers, ie not the people booking AirBnbs in San Diego.
Tourist attractions like San Diego has almost all the neighborhoods infested with AirBnB destroying the communities and making housing inaccessible for the average working Joe.
If the tourism does not pick up in next few months, most of these AirBnB owners would either sell their properties or rent it long term putting downward pressure on both rent and home prices.
How things would turn up, I have no idea but it’s gonna be interesting.
Who in the right mind would want to live downtown in a major city after the last week?
In my “village” as Wolf likes to call it, houses are back to selling literally within hours. As in listed at 9am, several offers, including sight unseen offers, by 5pm. This is mainly happening on the low end, sub-400K. At the mid range, 400-700 multiple offers within 24 hours is not uncommon, although those are taking days not hours to sell, typically. Over 700K it’s a more normal process, buyers can even – GHASP – take a few days and think about it, LOL. But not too long.
Talking to a few local agents, I’m hearing it’s mainly a lack of inventory causing this as opposed to a surge in demand. Demand is normal for this time of year, but supply is well below normal. People are still afraid to list their homes due to irrational Rona fears, it seems. So as soon as anything is listed, buyers pounce with a vengeance. Any contingencies with an offer and you might as well not even waste your time.
So while you will see all sorts of headlines showing sales numbers down, prices are skyrocketing simultaneously. Counterintuitive of course, but reality at this moment in time in my little burg, err village.
Just Some Random Guy,
“Talking to a few local agents…”
Yes, they’re salespeople, their job is to sell and heat up the market, no matter what. And your job is to swallow what they dangle in front of you hook, line, and sinker, and it looks like you’re doing your job admirably well.
You are annoying RE BULL. You must have some rentals or are a RE agent…
Nobody cares about your “just some random comments”… homes selling within hours… blah blah..
I’m still stuck on Detroit. In the first 20years of my life I lived in NY, TX, MO, CA, WA, AL. My Dad worked in aerospace.
Detroit=Winter=no thanks ??
I lived and worked in Detroit from 1974 to 1979. Couldn’t wait to get the heck out of there. The manufacturing plant I ran is now an empty lot and houses that were around it were torn or burned down long ago.
Anecdotal, but I’ve been here almost 10 years and don’t think I have seen as many moving vans and UHaul trucks double parked in the north side of the City (SF) than I did over the past week. Seemed like there were a few on each block.
Did you see the same? Looked to me like the younger renters are either losing jobs, or were on the fence about staying and got the “work from anywhere” notice compounded with the mayor saying any sort of normal nightlife is months away (which is a whole different debate).
It’s “moving day.” End of the month. But I don’t know if it’s a bigger moving day than a normal May 31 to Jun 1. Would be interesting to get some data on this.
When I was in college May 31 was when everyone moved out of apartments and everyone moved in for the following school year on June 1. It was mayhem, in a fun way.
The high rent places people are leaving also tend to have high state income tax. It will be interesting to see those states try to hang on to that revenue. NY is taxing the C19 healthcare worker volunteers because their actual out of state employers generously kept them on payroll. NY also says you pay state income tax if there is an office in NY for you, and you could have been in it, even though you weren’t. Remember when CA tried to claim income tax on people’s pretax 401k and pensions after they moved out of state, claiming the tax break was taken in CA, so it should be their income when withdrawn? Lost that one in the Supreme Court.
Income tax is only expense people have. Home prices, property taxes, commuting expenses, utilities and other outflows can be a huge slice of a paycheck. For example, you could move to a rural or suburban town in New Hampshire because it has no income tax and housing is cheap. However, the job opportunities are slim. You may have to commute to Boston to get a good professional job with a career track. There are many factors to consider. A younger person will look at future earnings and how much he will finally accumulate. A retired person like me isn’t concerned with income tax very much.
New York has high expenses and high taxes, but it pays a lot more into Washington, DC than they get back. A lot of the money ends up in the Red States. How many retired New Yorkers spend their pension money in Florida? It certainly benefits that state.
The whole point if the article is that it matters less where the employment is physically located now, so it is easier to live in New Hampshire, live cheaper, pay no income tax than it was before. Taxes can and do motivate people’s actions. That is the justification for passing many taxes (gambling, cigarette, alcohol, etc.). The entire muni bond market is based on accepting less interest in exchange for less taxes.
I don’t think this is a “New Hampshire vs Boston” thing for most people. It’s a “NYC vs Miami”, or “LA vs Dallas”, or “Chicago vs Nashville” thing. You can have a fine career in most fields in a 2nd tier city with most f the amenities of the larger city but with far lower taxes and other costs. For me, it was SF to Denver, same pay, less than half the housing cost, and about 30% less tax. Over the course of my career, it has shortened my path to retirement by about 10 years.
When the government checks run out and reality hits:
1: Houses will start to sell, leading to lower prices.
2: Corporations will buy a majority of these properties, renting them who still have the means to afford rent.
3: Those that do not have the means will be supported by governments to pay their rent to prevent further anarchy.
4: The 1% will get richer, the 99% poorer.
The middle class is now officially history in this era of time.
I have been working from home for about a year now and used to working from home when I consulted. What I see moving forward with my corp. is that they will have 70-80% back and the rest will stay at home.
Wonder if anyone has the idea of keeping the primary home and buying an RV with Verizon Hot spot wifi or another Wifi enabled system with VPN. That way you still have a home address, but you aren’t there a few months out of the year. How would they know?
It’s very tough to hide your location once you get online because of the routing data, including your IP address, is known to the recipient.
You can try putting a VPN server — your own piece of hardware equipped with the right kind of software — inside your home and run ALL your internet traffic with your company, including the ZOOM calls, through it. In other words, once you’re in your RV, you log into your VPN server at home (hoping it’s still plugged in), and then do your company business that way.
That might work in deceiving your company for a while until they try harder to figure out where you are. And then you’re toast :-]
Pieter, why would anybody’s employer care if their WFH employee spent some of their days doing their work out of an Airstream? I don’t get it.
pay. Facebook stated just a week ago that if you were to move that they would expect you to take a lower salary based upon you new location. I would assume If I spent the summer in Montana fly fishing my employer would want me to take a reduced salary regardless that they hired me based upon the value I add to the corporation. I work weekends and all week as needed working on international freight issues. My hours are when I get a text or email to fix problems and save freight dollars worldwide. I don’t want to lose salary because my location for six months changed.
You may want to seek other employment/client opportunities Pieter.
As a ”contractor” most of my long career WFH was the normal course of biz; later on, as employee/consultant with limited scope of work, both my employer and I were happier when it was a combination of in office and at home, because they knew from experience– receiving my detailed invoices– that I was much more productive with certain aspects of analysis and spreadsheet development when I was not bothered by bosses, two types of phones, physical visitors, meetings, etc…
And I suspect most professional peoples will end up with some sort of combination, because, let’s face it, if a professional person is not trusted by a client, there is really no point working together from either’s point of view/value, etc.
Of course my clients were used to me telling them, ”Don’t waste my time and your money.” That may have made a big difference, at least to some of them.
This is hilarious ( it’s not)…. The rents in cities where are broke people live are going UP… like a bad dream
Wall-street kicking people while they’re down on the dock.
Wait till homeowners go bankrupt and their homes repossessed and sold to the highest bidder. The future landlord will then raise rents to pay back his acquisitions.
StitchFix is laying off 1400 people in California and looking to rehire them in cheaper states.
Yeah outbound migration will continue.
It’s interesting how they framed it — not transferring people, but laying people off, and the laid-off Californians can apply for a StitchFix job in Texas or Alabama or wherever their centers will be.
Macy’s did that with its tech center in SF — they laid their 1,000+ people off and said that some of them might want to apply for a job at their facility in Atlanta.
This is sort of a new thingy, from what I have seen, and it seems to be taking off: instead of transfers, you lay people off and they can reapply for a job in the other location, under local wages.
Wolf, they did say the following: “laid off stylists will have the chance to relocate and continue working.”
Of course, what’s left unsaid is: “we will not bear relocation costs”. Also “we need you to be at your new place by xxx date, got things to clear out before then? Tough”
If I recall properly, LendingClub did something similar. Can’t recall if they offered relocation assistance though.
I worked from home for 15 years and then went to a regional office. Guess where I got promoted- out of the regional office. Why? Because I was then in the loop, I could look at successful counterparts and mimic them, etc., etc. It sounds good but to effectively evaluate personnel, you have to see them, in meetings, at lunch, and at the local watering hole.
”.. at the local watering hole.” is SO 20th Century lars, that i cannot believe you included it here in the beginning of the third decade of century 21st.. LOL
You may as well have added some similar ”stuff” of that nature widely circulating then, such as, ” ya can’t never trust a man until ya get drunk with him, and ya can’t ever trust a woman until y’all are intimate.”
That kind of thinking is SO out of line with today’s reality that I almost have to admire a certain male politician who will not go to lunch with a woman without his wife also present…that is to admire him as the most prominent of the ”neo-luddites,” with their apparently serious commitment to their heads being seriously committed to sand or somewhere the sun don’t shine, eh
Do rents have any predictive power at any level to the broader housing market and property values?