New York City, San Francisco Bay Area are the big losers. The great 2020 exodus raises the question: Will the techies ever return?
By John E. McNellis, Principal at McNellis Partners, for WOLF STREET:
Viewed a certain way, life resembles a Vegas sports book — its dramas have at least a few winners; not everyone loses. Covid-19 is no exception. The airline industry is on the tarmac, but RVs have never been in greater demand. Public transportation has a flat tire, yet bicycles can’t be found for love or money. Pharmaceuticals have skyrocketed, while the oil & gas industry is a dry well.
Real estate has its front page winners and losers — Amazon distribution centers on the one hand, enclosed malls on the other — but, unlike many industries, the where, as opposed to the what, often determines real estate’s victors and victims. It doesn’t matter where casinos are — they’re all crapping out. But, unlike gambling, the demand for housing is relatively constant; not everyone can move into their mother’s basement. The question is: Where is that demand?
It’s neither in San Francisco nor Silicon Valley, nor, one suspects, in any of the darling coastal cities that were secular meccas until the virus hit.
I quizzed four Bay Area apartment moguls. One, the owner of thousands of Silicon Valley units, said his occupancy stands at 90% and his rental rates are off 10% from their pre-virus high. Another, the owner of a small but stylish portfolio, said he’d never seen so many intractable vacancies in Palo Alto, and that his rents are down 21% from a year ago. The president of a multibillion-dollar apartment company said his suburban walk-up units were performing close to normal — no more than 7% off —but that his high-rises were down by as much as 25%. (The elevator remains the virus’s biggest loser.)
Finally, the president of a major apartment builder declared the world upside down. He said the Class A urban jewels — the apartment buildings that twinkle on San Francisco’s skyline — are the hardest hit of all, with “real net effective rent” off as much as 25-30%.
While doing everything they can to immediately lease their units, major apartment owners are wary of Proposition 21 — the November ballot initiative that would prevent landlords from raising rents to fair market upon the vacancy of an apartment. Thus, many owners are achieving today’s market rents by giving away months of free rent, free parking, etc., instead of dropping their pre-Covid asking rents.
Why are the Class A urban jewels hardest hit?
“Because they were occupied by renters by choice. Now, there’s no reason to spend $5,000 a month for a one bedroom,” he responded. “There’s nowhere to go, the city is shut down, and no one has to be anywhere in particular. It’s different for the renters of the B and C properties — they’re stuck.”
Along with New York City, the Bay Area is the big loser in the flight of the techies. Seattle less so, and Denver seems unchanged this year.
And the winners? Pretty much anywhere else in suburban or even rural USA. According to Redfin, Sacramento’s housing prices are up 10.1% year-over-year; each listing gets an average of three offers and “goes pending” within 11 days. Sacramento, go figure. One cannot escape the exaltations about the glories of life in Boise and Bend. And of every other charming hamlet in Montana, Texas and Arizona. (It’s fair to wonder how at home Rockefeller Republicans — let alone Democrats — will ultimately feel in towns where the term “gun control” means using both hands.)
This great 2020 exodus raises the question: Will the techies ever return? Only if the jobs do. Few millennials and Gen Zers will pay $5,000 for Bay views and lingering fog. This means that companies — and their employees — must conclude that working-at-home is akin to having a substitute teacher in high school: It’s fun for a while, but the talented soon weary of learning nothing. It seems to me that those who wish to get ahead — you can’t get promoted from your bedroom — make sales or meet like-minded employees for friendship or just to get the hell out of their sweatpants will demand a real office the day after we have a month of zero infections.
The jobs will likely return to Silicon Valley. Stanford, the stellar nursery for the birthing of technology’s stars, isn’t moving, and startups will continue their toddler and teenage years in Palo Alto and Mountain View. Whether they cross the Sierra once they reach adulthood, as Palantir has fled to Denver, is another story.
San Francisco is also another story. Between the homeless encampments, the constant clamoring for taxing the rich and the pervasive sense that life’s quality has somehow been lost in the progressives’ politics, it may be that the city’s undeniable attractions will appeal only to the downtrodden and the tourists, and that its epoch as a major business center ended in 2020. By John E. McNellis, Principal at McNellis Partners, for WOLF STREET
Work-from-anywhere, unemployment, the land rush for houses, virus-fears about elevators, the oil bust: Big shifts for the fifth month in a row. Read… San Francisco Rents in Free-Fall. New York Rents Swoon. Expensive Cities, College Towns, Cities in Texas, Other States Sag. But in 16 Cities, Rents Jump Double-Digits
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“You can’t get promoted from your bedroom.”
Or can you?
Bonds can be formed over chat networks. Virtual face to face conversations are becoming normalized. And a lot of actual tech work is purely in the virtual domain anyway.
Yes, thats a stretch, but I suspect many companies will like the cheapness of work-at-home too much, and rotate employees in and out of their pajamas rather than bringing them all back.
There is no reason why companies can’t run on a 4 out/1 in or 3/2 telecommuting model in order to lower workers’ commuting costs ($ and aggro) and companies’ office sf costs (timeshared workspaces).
Whatever politico-gladhanding salesmanship “needs” to go on…can occur during the 1 or 2 “in” days.
The downside of this model is that the whole kit and kaboodle for everyone isn’t moved to one of the other 250+ metros in the US whose cost-of-living is a third (or less) of the Elephantine Four.
The whole disease vector v. Broadway/Fog analysis is simply triggering an economically sensible diaspora that really could have/should have started about 20 years ago.
And what happens when the “in” days for your company don’t line up exactly with the “in” days of your many customers? It’s not as easy as you might think.
All the sales teams we interact with have been remote so far and for good reason. It just doesn’t make sense for them to go out into the field knowing they can’t navigate the crazy maze of corporate covid-related restrictions, municipal/county regulations and ultimately the social distancing/masking/hygiene preferences of their end customers.
1) What percent of corp personnel are really customer facing? In my experience, a lot of corps don’t have that high a percentage.
2) “All the sales teams we interact with have been remote so far”. Hmm…doesn’t this contradict your main point? You have been *interacting with* them…
For companies downsizing the office. I would assume that public facing jobs would have permanent at office desks (purely phone people excluded). Along with maybe the hopefully tiny HR department/person. And the executives would still have a office, often there or not. There might be conference rooms for certain events or necessary in person work stuff.
But really, if you want to maintain an office at all, but downsize, it would make sense to just switch to the long tables with everyone on a laptop. With the conference rooms that anybody can use. Or some other shared space concept. In some offices, employees in only if needed. Having a mandated in out proportion policy seems shortsighted.
Unless the economy really tanks, I would just assume that offices should maintain what they are doing right now until pandemic over, then design offices or WFH without pandemic in mind. When those leases (if any) expire is a big factor though. Of course if you maintain a office in an area, which, becomes nearly abandoned, that might convince you to do the same. And of course, I think many people will be automated away or replaced with gig workers or cheaper more remote employees.
I worked from home for 15 years and it’s great while you’re raising a family. But if you’re single or empty nesting it’s a living hell unless you’re an extreme introvert, and even then the loneliness can be wearing.
Some percent of the population will stay home officing, especially young families, but with work replacing the center of life of communities and churches, I expect the majority to return to an office for simple human interaction and avoid being alone or with the same family members for days on end. We’re only six months in, and I predict most people will be clawing to go back to a regular office in six more months.
People who’ve been successfully working from home for years or decades without going nuts have done so by creating their own social and professional network, including in-person meetings and events pre-Covid. The idea that people who work at home just sit around at home all day alone and go nuts just isn’t true if you do this correctly.
But it takes a while to transition from an office environment, where social and professional life – like it or hate it – is handed to you, to WFH where you have to create your own social and professional life.
Moving to a small, cheap town where a cultural event consists of a BBQ and a tractor pull will not cut it for most educated people in the middle class and up. People need to be among their peers to enjoy shared values.
I used to live in a small rural town of 2000 residents. At first it was picturesque and amusing. Later, it made me feeling like I was struggling to breathe.
WFH isn’t working so well for the young professionals. Most of them have roommates that work from home as well. Defining your own space in a small apartment is difficult with multiple tenants. Not to mention that young people must tolerate their roomies for much longer periods than originally anticipated.
I have young adult children and have seen their friends and colleagues shuffling living arrangements. WFH is frowned upon and seems to be quite stifling for them.
I don’t see this WFH lasting long term for many. They are patiently waiting to crawl out from under their rocks.
This is just what I am witnessing.
‘will demand a real office the day after we have a month of zero infections’
How soon wil this be? Next year or year after that? or this Wishful /Hopium thinking!?
Yesterday infections in USA 43,000+ including Prez Trump!
Deaths around 847.
POst Covid 19 – ‘NEW NORMAL” World
Goodbye To All That: Are Our Rituals of “Prosperity” Increasingly Meaningless?
“The many rituals of a central office–the endless meetings, the petty arguments, the smoking breaks, going out for lunch–goodbye to all that. A couple of quarters of steep losses in revenues will push every company and agency to strip away all the rituals of consumption that are no longer affordable…’
‘..Many activities of discretionary consumption are in large part rituals: going on vacations, taking cruises, shopping, dining out, and so on. While many will miss the performance of these rituals, others will realize they don’t really miss them. Some will feel immense relief that they no longer have to put up a facade of enjoying the tiresome, meaningless rituals….’
“Humans crave certainty, as ambiguity and uncertainty create unbearable anxiety. This desire to return to a predictable “normal” drives us to grasp onto whatever is being touted as a certainty: a cure, a vaccine, a fiscal policy to restore the “Old Normal” economy, etc….’
Update in #of infections and the deaths
‘Yesterday (Friday)infections in USA 43,000+ including Prez Trump!
Deaths around 847’
Now – # of infections in USA 53, 428
-# of deaths 863
i am a programmer.
had been doing the Boston area commute for many, many years.
i now work remotely from home and love it.
no more 2+ hours a day in traffic swearing at people driving stupid.
i can now easily make it to appointments that used to take weeks of planning to setup due to time/scheduling conflicts – drs, car inspections, yada, yada.
Most of the time when i was at the office, i would spend the day interacting with my fellow employees over teams/slack.
How is doing this from home any different?
I’ll be blunt. Perhaps this comment will never be seen. If you’re young, you won’t get laid by someone new when working remotely at home. On top of student debt, covid-19 is dramatically increasing an already plummeting marriage rate. Few have the character to be a lighthouse keeper.
Oops. I meant dramatically further reducing the marriage rate. Duh.
in calculus, “increasing plummeting” works!
Most lighthouses are now fully automated and before that there was usually a rule that you couldn’t be alone in one. Otherwise I’d be tempted!
You are NOT the only one !
Millennials Say They’re Even Less Likely To Have Kids Now Thanks To COVID-19
ZH Oct 2. ’20
people are over-rated. been working from home since 1980s. I will never to work in an office, never ever lease office space again, etc.
Perhaps you are just “on the spectrum” ?
Pethaps others are not ?
I am sure you respect neurodiversity.
You make my point. You’ve been doing it since the 80’s. The option has existed for decades. Loner misfits like you have always had the option.
The only reason things have changed is because of the pandemic. When it ends the rest of us go back to our routines and you can stay in your cave.
You’re not listening to the people who make the decisions at these companies that have large offices. Sure, they’ll bring employees back to the office, but they won’t bring all their employees back all the time. The old normal is gone. Too much has been learned since then, and they’re not interested in unlearning it.
Real estate decisions and office market dynamics are now showing up in the data. These decisions aren’t short-term decisions. Commercial leases typically are for 10 years and up. These are long term decisions — and look at the newest office leasing data for Q3:
Those nearing child bearing age or raising a family, the majority of young techies, will never return to nor stay in San Francisco, which has the most politicized, lowest performing and absurd public school system in the nation.
An example: “the school board for the San Francisco Unified School District voted overhaul of the district’s contentious “lottery” elementary school enrollment process. The current system allows parents to rank the schools they want and lets a computer sort out who goes where, with first priority in choice for siblings, second for those living in areas with low test scores and a third “tie-breaker” for neighborhood proximity. Parents are frustrated and confused by the lack of certainty in the school selection process.-Norton said, the answer to make parents happier about the enrollment process has never really been about the enrollment process to begin with. It’s about changing perceptions.”
In other words, you should be happy your child is ordered to a school across town for “multicultural enrichment.”
Gamble with your child’s future:
Unfortunately, you are viewing this from an employee point of view. The companies you are working for are seeing the cost savings of smaller offices as soon as the lease is up for negotiation. They see smaller bills for phones, desks, computers, and other equipment. They see smaller bills for workman’s comp insurance since you are working in your own home.
Employees have to learn to see the situation from the employer’s point of view. Fewer fixed costs equals a bigger bottom line. Your feelings on the cost issue do not matter, nor should they. You are doing a job for a salary. If you don’t want to remain due to the work-from-home requirement, there are other jobs out there. Vote with your feet.
I was self-employed for 30 years, with my work space being my dining room table. And that was before any electronic communication except email. I thrived on the situation.
If you feel isolated and lonely, you are doing it wrong. You have colleagues that you can skype or zoom with on a regular basis. You can go outside and interact with the neighbors. You can go to Dunkin Donuts or McDonalds for coffee and to meet friends.
It is a totally different world and will not likely change back to the old days. Get used to it. Adapt.
I think you CAN get promoted from your bedroom but not for senior management roles, I think.
By definition, only a tiny percentage end up in senior management, period.
Does it make sense to triple the entire cost basis of the corporation (all salaries have to reflect Elephantine Four’s engrossed cost of living) just so a handful of people can play Game of Thrones in person?
That’s one reason why Goldman Sachs moved personnel to…Utah…long before C19.
Not everybody wants to be MGMT. I never did. I would rather earn less, have less responsibility and not deal w/all the BS.
In my part of Telecom, mgmt means spreadsheet jockey, endless meetings, lots of politics/ass-kissing, etc. the sort of stuff that would make me want to jump off a bridge.
I chose to stay in the area where I could actually work and accomplish things instead of “managing”. It worked out great. I still love what I do. Ever notice most Mgrs are miserable?
WFH reqs a little bit of creativity/imagination. Mix up your routine. I used to have a river in my backyard, so taking a break to go outside was incredibly pleasant. Work out while you work. Find ways to make your workplace awesome.
If you can only meet people to date at work, you aren’t trying very hard, imho. The most I would ever agree to is a day or two a week in the office again. WFH is the best, if you make it so.
It worked at Google for Sergey Brin’s wife and mistress.
And at Microsoft for Bill Gates’s wife Melinda.
And for Theranos’ CEO Elizabeth Holmes. She married a wealthy guy 19 years older than her that she got to invest in her company.
The list goes on.
You are correct, WFH won’t get you promoted to senior management, but you are assuming that a corporate HQ has to be in a big city. If the HQ is in a regional town, that is where you need to be to get seen and acknowledged.
I spent my career in NYC and know people in regional offices never moved up the chain until they took a transfer to HQ. Now that senior management is moving as well, this spells the death of big and expensive cities.
It would be more fun to fly in a private jet to Bermuda for your upper management interview than meet in a high-rise office anyway.
Glengarry Glen Ross, people didn’t believe you could do it over the telephone either
The folks gushing about living in Bend might be singing another tune soon. 2 of the 3 main highways over the cascades to Bend from the Willamette Valley are closed due to fire damage, and with winter coming on most seasoned public works folks are betting the won’t be opened till next spring. They better hope that the airlines keep a few flights in central Oregon and that enough trucks can get over Mt Hood to supply them with food or they will be trapped like the Donner Party.
Well…that leaves only 249 metro options…
Interesting. Having grown up near Palo Alto in the 1950s, I am completely out of touch (flight of the disgruntled – retired in Thailand). But still like to keep slightly informed from a distance.
It’s quite a show Drifter Hollyweird can’t touch this one Just stock up on popcorn and lay back We haven’t even gotten to the intermission yet
Haven’t heard that term in decades. It’s how I used to describe myself–fiscal disciplinarian/social libertarian–but people would look puzzled when I’d use it, so I’d say “Moderate Republican” and they would look absolutely perplexed. I don’t recall RRs being rabid about gun control but, like I say, it’s been a while.
Good riddance, techies. You won’t be missed. Your jobs will follow you shortly, on their way to India. Bring real California back.
Unfortunately, it would be hard to define what “real California” was. A very mixed bag, but always placed on real estate (raw land) that was among the highest valuations of all the states….New York and Oregon soils were up there too. Mr. Lucas did provide a lasting snapshot of some elements, but note how quickly he jumped to the rising tech game in the next venture. I doubt there will ever be roadside artichoke stands replacing Silicon Valley. California was always among those states at the forefront of advancing industries, but there were reasons for why factory concentrations ended up in the places like Detroit. And all the best lands in California are now largely gone to waste under a sea of stick huts captured in a game of rampant speculation. Tech may be one of the few things they can squeeze in there.
re: “And all the best lands in California are now largely gone to waste under a sea of stick huts captured in a game of rampant speculation.”
Not remotely true. The Central Valley–some of the best farmland in the world–still has thousands of square miles of open farmland (my family has 20 acres of almond orchard with two houses on it). True enough that ‘suburbia’ is encroaching, but there’s still plenty of open space, and don’t forget the numerous national, state and local parks.
Cal Bob-true, but as i have asked here before (and this applies to ag AND urban settings in the nation’s most-populated state now experiencing significant climate pertubations): “…where is the water???…” going forward?
may we all find a better day.
“Not remotely true. The Central Valley–some of the best farmland in the world–still has thousands of square miles of open farmland (my family has 20 acres of almond orchard with two houses on it)”
Well…. much of that “open farmland” is mainly ‘closed’ to the mono-cropped (GMO) agriculture ‘industry’ that routinely douses the land with neo-toxic pesticides/herbicides..etc.
And, not to mention all of those acres and acres of environmentally unsustainable “Almond Orchards” that require massive amounts of a resource that’s rapidly dwindling almost everywhere in the Golden State – especially regarding the Central Valley aquifer: Water!
Ah, just wait till another mega-series of ‘atmospheric rivers’ make their way across one mountain range to the other .. from shore to Valley shore!
Might want to keep the zodiac stocked and ready, cuz ya never know ..
Yep, water is a BIG issue (always has been in California). I had to think long and hard before planting 9 new acres of almonds, but I had to do something with the land as it was becoming a dust bowl, and I’ll likely take the original 9 out in the next few years (FYI, we also co-plant annual crops when practical). Almonds are over-planted, there was a record harvest this year and the price is down, but I’m enjoying watching my little trees grow.
As for the knock on mono-cropping, GMO seeds, pesticides/herbicides, etc. the only cure is reducing the planet’s population; the world won’t be fed with ‘organic’ victory gardens only. Take away those ‘scientific advancements’–you can argue the term, for sure–and you’ll have mass starvation (we may even get a taste of it as the food chain will likely be adversely affected by covid, and the ongoing war against immigrant farm labor).
If you want to know how much of the food on your table is provided by California, before you knock our farming practices, you can start by searching on ‘how much food does California produce.’ I’d provide a link but, you know.
Cal Bob-good on ya’. Too many still sail through this American life secure in the belief that breathable air comes from the sky, freshwater from a tap, and food from a supermarket. Too many don’t/won’t realize what a dynamic and challenging and constant effort successful farming is, and, in our nation, how we’ve enjoyed the benefit an unbelievably cheap and reliable supply of food for many, many, decades (please fill me in, anyone, of the dates of our last national famine…).
Pole-hope to hell we get a ‘mega-series of atmospheric rivers’ coupled with a sufficiently cold winter to lock them up in the Sierra snowpack. Mountain snowpacks are the main source of water in the west (coastal rainy WA/OR/NorCal the outlier), their spring summer meltoff feeding the rivers and aquifers much more than the relatively short, and highly variable (4-6 months) rains followed by an almost-guaranteed (5-7 months) dry season (and ‘dry’ means DRY). The now-odd super-wet season increasingly surrounded by now overly-dry ones, coupled with warmer winter/spring mountain temperatures, does not bode well for Western water supplies. A single ‘really rainy year’ doesn’t fix things very far into the future given current demands.
Agh, sorry to rant, but i do that. My apologies, and-
…may we all find a better day.
I’m a techie looking to leave Portland OR. WFH and consulting have kept me busy but I’ve had my fill of the CV19 insanity. Texas or Florida are the top of the list. I wouldn’t take another job in CA, OR, or WA if you put a gun to my head.
Come to NZ we need talented engineers
I considered that until your PM went nuts on the lockdown.
My info may be out of date as I last lived there 11 years ago. But back then, outside of Auckland and maybe something in Wellington, there were basically no tech jobs to be found. Also NZ pay scales were very low compared to the SF Bay Area. Of course, that’s true of almost everywhere compared to the Bay Area …
Quality of life was good in NZ but it is what the map says it is – small and isolated.
Also, back then NZ protected its tech jobs and you couldn’t easily get a work or immigration visa just because you had a tech job. I only got to live there because my wife was a doctor and NZ heavily imports doctors.
To be honest, given the chance, I would move back there, but then there are a lot of places I would move to. Currently stuck in the bay area because I have kids.
Really? if I was 25 years younger I would look into that. How is NZ for retirement?
To be honest I was being a little tongue in cheek. I know that NZ is not everyones cup of tea. Living is fairly expensive. House prices are out of this world in relation to local pay rates. How ever, if you are well set up exchange rates are favorable and if you have a good future plan and don’t mind isolation from the rest of the world things should work out. Bearing in mind while this pandemic is on immigration is on the back burner.
Many are in your boat, hence the rise in home prices.
Rising marginally because landlords cant kick millions of people out… yet…
If you want to come to Texas, be aware that Dell is laying off engineers. But Austin has more tech so you may find a spot.
Boeing is moving to South Carolina. Voting with their feet.
No, voting with their bottom line, so they can ditch the unionized high quality Puget Sound area workmen who build quality aircraft in favor of non-unionized, cheaper southerners, and voting with the lives of anyone flying on their aircraft.
Is there any evidence of this, such as increased plane crashes or maintenance? Or is this just your opinion?
Since when has union labor equaled quality? Is GM better than USS built Toyota?
Yep. I live in Greenville SC. I only know what I read about Boeing. The bulk of the workers at the North Charleston plant are temps. They work for six months and then have to go away for six months. I think it was the Qatari airline that wouldn’t buy any Dreamliners built in Charleston. Some of the Dreamliners are developing cracks in critical places because of manufacturing problems. SC is known for low wages and little if any worker rights.
The 787 assembly lines have produced two scandals so far, a tool left lying around in the fuselage of a delivered plane, and careless or untrained fittings to sometimes inappropriate gaskets (though that’s not what they call it). The North Charleston plant was a former McDonnell factory producing cost-plus planes for the military that, as we know, don’t have to work well. That management and culture took over Boeing after their merger, to disastrous effect.
EEngineer, Please take all those Texans that are clogging the roads here in Portland with you. I have never seen so many Texas license plates on the road here in my entire life. Please educate these folks why Texas is so much better so they can head back there too.
Inequality killed San Francisco. Real estate investors squeezed people out of their apartments and onto the streets. The city’s own studies show over 70% of the homeless population had homes in San Francisco before they had the rug pulled out from under them. Now the architects of inequality, aggressive real estate investors and consortiums who don’t care who they hurt, blame the victims of their excess for making the location of their investments unattractive.
You can’t reap great wealth from the Gilded Era 2.0 and pretend you have nothing to do with the misery. I mean, you can. And do. But no one else is buying it.
Thank you for that, Miss Ida.
This is always a difficult question, and has been going on for decades. I recall the East Bay towns, like Union City and maybe even Fremont and Newark that were full of dive bars and small businesses. In Union City there was a famously smelly water plant. I just looked on the website, and sure enough in 1986 they installed odor treatment systems (so residents could continue to move closer, and techies wouldn’t complain.)
The two big winners in the past 3 decades have been techies and financial services. These are both “intangibles” (mostly), so they could afford to be in the hipster cities.
I am skeptical about the continuation of the financial services’ continued success. Maybe this also drags down the techies. Amazon could never have gotten to this point without a tremendous appreciation in stock price, and many of the famous names in tech are in the same situation.
As the reality of urban living bites, I guess it will all change. And it may not change back for decades- until this episode is “forgotten”.
Amazon couldn’t have gotten off the ground if they were legit collecting sales taxes on book sales.
Collecting tax throughout history has always been about a jurisdictions ability to actually collect… no leverage… no tax…
The “city’s own study.” You are using the numbers from the dozens of homelessness industry non-profits that get more tax money the more homeless they serve and the public policy they influence, through voter registration of the arrivals who use their mailing address.
“Unhoused”, the new-speak term, who arrived in San Francisco, lived with a roommate or rented for a few months and then failed for personal reasons are inevitably called residents as that claim gets them more public and private benefits than a lifetime property tax payer or renter recieves.
Hand them a house and it wouldn’t change the drug addiction and alcoholism, which afflicts most. The city’s weather is mild, so is more comfortable for homeless people during winters. It has a reputation for tolerating any public behavior, minor and now midlevel crimes, while it provides it higher cash assistance than other cities (Murphy, 2009)
Factual overview for the uninitiated:
“The city’s own studies show over 70% of the homeless population had homes in San Francisco before they had the rug pulled out from under them.”
Please link to studies so we can see the methodology.
Hard to believe people will vote for homelessness over relocation (previously housed indicates *some* level of financial resources…enough to move away).
Have no problem believing that people were priced out…have a lot of troubling believing they chose to stay…at the cost of living on the street.
The real winners are the long term residents of San Francisco who are Dancin’ in the Streets as these d-bag techies pack up their $hit (more likely, just abandon it) and leave the city, hopefully never to return.
> The city’s own studies show over 70% of the homeless population had homes in San Francisco before they had the rug pulled out from under them.
Sorry Ida, dont believe you. A made up number by a vested interests.
Last time I looked almost 2,000 people were employed directly or indirectly by the “Homeless Industry” in SF. Very little of the $40K plus spent per “homeless person” per year actually gets into the hands of the people on the streets.
In the four decades I have lived in SF the stats on street people have changed little. Pretty much the same now as it was back in the 1980’s. About 6K to 8K street people at any given time. At least 50% have been in SF less than 6 month. Zero history of normal residency in the City. Of the rest at least half (25%/30%) have only the most cursory history of normal residency in the City in the previous year or two. Drifters.
Less that 20% of street people in SF have any real connection with the City. Of those they are overwhelming alcoholics , junkies and the mentally ill. The alcoholics and junkies refuse treatment programmes and due to the ACLU lawsuit in the 1980’s the seriously mentally ill cannot be forced to take the medication that will keep them functional.
Over the years I have seen literally tens of thousands of street-people but very very few actual homeless people. People who lost their apartments / rooms and had nowhere to stay. Maybe 10 or 20 a year. When you are a local they are very easy to spot. The real homeless. In all cases I have seen they are people who moved to SF years / decades ago, never natives, and only lived in the City as long as they did because they had a rent controlled place from way way back. Time moves on but their income did not and when they lost their place (rarely due to landlords I might add) they can no longer afford to live in SF but refuse to accept that simple fact and move to somewhere they can afford to live in. Which there always is.
I have seen some real genuine hard luck stories over the decades but they are few and far between. And it always worked out for the best. But that is the same in all cities. Everywhere.
The other thing that has not changed since the 1980’s, the most successful programme for getting street-people off the street in SF. A bus ticket home. Where at least they might have some support network.
The people most responsible for keeping street-people on the streets (and dying in such appalling numbers ) are the “homeless activists” and the “homeless industry”. Without street people how would all these smug self-righteous hypocrites make a living or get their outrage hits.
Quick question, been in SF General recently? I have. Making sure people in distress on the street got medical treatment. The last time the guy lived in a shelter. Had been ignored by all the well dressed progressive types who now live in the Mission. Just me and a much of hispanic ladies took notice of the guys very obvious pain, and as usual, I was the one who did something about it.
Thats the difference between compassion and virtue signalling.
Another winner in Johns “Vegas Sports Book”, one good thing out of a completely disastrous 2020, at least the traffic in Silicon Valley has been and has so far been a lot better! Used to say the same for the air, but the forest fires killed that thought.
Wolf you asked “ Who are the winners “ and your answer was suburban and rural areas Well that’s partially true but another one of the winners is inexpensive smaller cities that didn’t experience the bubbles as well as international locations where the crime and cost of living is lower I’m a perfect example of this phenomenon having lived most of my life in the Hamptons which is just a spin-off of NYC and finally had enough and left for a better life elsewhere
Rural areas do not want an influx from anywhere. Regardless, when urban minded people move to our area they don’t stay very long. The quiet and weather drives them away I think. I have seen many relocate, but they always move away within a year or two.
The scary thing these days is most people spend almost their entire lives indoors, rural or urban. My wife and I are out and about all day if the sun is shining, and still walk on bad days. My neighbours, who have lived here 50 years seldom leave the house.
Does it really matter where people live if they always stay indoors?
Not me Paulo I built houses for a living and worked all winter in NYS many times minus 0 F and love to be outsideFishing, gardening, hiking and sailing is where Yourll find me But I realize I’m an odd ball
Same thing in Vermont where I have family Lots of City people vacation there and decide to relocate only to find out what the winters are like
In central New York, low-end houses in the $40k range with a fresh coat of paint have tripled in value.
Pre-COVID similar houses downstate were worth $200k.
Most tech stocks are priced for perfection. If valuations burst then the tail might wag the dog and cause layoffs making tech area real estate to go under.
The next couple years will tell.
Sooner or later the US has to replace all that old fashioned manufacturing capacity lost to China; thus many of the so called “techies” will serve their best interests by becoming immersed into the resulting new start-ups; that will, inevitably, be spread right across the nation.
Actually across the globe We have a growing start up industry in Warsaw Banking is exploding too with Brexit and the big banks realizing they can get top talent for half the cost than in London or Frankfurt Google opened a startup incubator on the east side of the river a few years ago in an old brewery building
“Start-ups” as in actually making stuff? A few more years of high unemployment and inflation should certainly get labor costs down. But get ready to be extorted by Amazon and Walmart to get margins razor-thin so they will privilege you to sell your products.
Very few companies are making stuff anymore in the U.S. We moved that task overseas. We just sell the imported products to ourselves anymore. We are becoming a nation of “shopkeepers”.
I think it is more like a nation of clerks and delivery boys.
Well to the techies that have been working from home long before the pandemic, the hope that things will go back to the way they were before when more techies get experience rings hollow… I get paid plenty to save and invest how i see fit, no need for a promotion… no need to make friends with colleagues (though i’ve made plenty of lifetime friends from meeting online)… it might be shocking, but you can learn a new programming language/framework/algo/etc at home… no need to pay through the roof for a urban shithole in the US when i can live abroad in a urban shithole with cheaper and a bigger apt with more amenities?
More companies are hiring remotely now too that would have never considered me before! I left plato’s cave years ago, and ill put a bullet in my head after i put one in whoever tries to drag me back in kicking and screaming.
Even if you WFH except one or two days a week, you’re not gonna be able to abandon the car or being near to where you need to go to the office.
And once some form of normality returns, social gravity will reassert itself.
No point being out in nowhere if a few times a week you travel into work, another couple of times you go to shops/retail/eat out with family, another couple of times you meet friends, etc.
Before you know it being ‘nearer’ civilisation wins out again.
The normal balance of those who like isolation and those who don’t will reassert itself and things will err back towards normal.
And don’t get me started on businesses.
They’ll say all the right things for a time, but control freakery will reassert itself when the social distance pressure drops, and once again it’ll be WFOffice.
“We need you three days a week this week” “we need four days next week” “we’re gonna try full time for a month”
Yes we’ve had a forced taste of WFH but it didn’t happen before so why would it stay now?
I think it will stay in some form but it’ll go at least more than half way back for ‘reasons’ management will come up with.
People will be flocking back in no time. Everyone moving to places such as where I live will soon find out just how boring life is and just how much the weather sucks. They will understand why living is cheaper here. Instead of 350 days of nice weather you get around 100. Instead of going to the beach or mountains you go to a crowded lake with million other people. As soon as this virus is over I might take advantage of the low prices, high wages, and make the move the heck out of here finally.
Given enough time, could the new San Francisco become the old Oakland?
Last I looked, even Richmond was cleaning up.
Will techies return? Depends on whether their compensation normalizes to global levels during the reset. Now, much too high for their employers yet inadequate to cover cost of living in the coastal cities. Maybe this is what the 5G push is about.
Let’s be honest, the West has had it’s day.
Emerging markets like India continue to thrive. Their universities produce engineers and scientists while ours teach philosophy and gender studies.
Not forgetting the many excellent tech programmers India has as well.
You are exaggerating and mischaracterizing the situation. The USA has some of the best engineering schools and despite years of effort, India is still mostly relegated to offshoring the cheapest and least complex bits of the software development and engineering processes.
For a long time I have been waiting for India to eat our lunch, but it hasn’t yet, and I don’t think it will any time soon.
I am an engineer and for years did specialized subcontract work at one of Intel’s big Campuses. From what I could see after spending many hours in the big cubicle farm there was the Indian (H1B’s) did the volume coding grunt work, the middle aged americans managed the various groups and engineered the specialty stuff, and the whiz bang programmers with the special sauce were the Russians.
I would hire programmers out of the eastern block before any from India/China. The people out of the eastern block know theory and the Indian/Chinese programmers know how to cut and paste from the internet.
Sorry man, but you’ve drank the Kool Aid.
gary, are you replying to Dave Mac or to me?
Dave Mac naturally
My anecdotal experience working with some of the engineers and programmers out of India from a large consultancy is they are not comparable to Americans for an American work environment. In many cases decently good at their narrow technical areas, but there are multifarious communication issues and unexpected gaps in their knowledge. Programmers that cannot navigate domain logins and VPNs do not inspire a lot of confidence.
A bit too early to consider a possible return. The exodus is just warming up. Let’s see when this out migration process finally ceases.
Have no doubt though that no matter how long it may take, they will eventually return. Costs should drop enough to provide a compelling value proposition once again.
“Techies” living in large cities may not realize how much large cities bring competition in for availability and lower prices for the things they want to buy. They have a bad purchasing experience, then write a bad review for others to see, then the competition swoops in to grab a new opportunity. This is less so in small towns. I had a friend who did the WFT rural move with his wife. They had a plumbing problem in the old house they bought, and the plumber didn’t really fix the problem, but charged a lot for the work. The wife yelled at the plumber and complained to everyone. The neighbor said that was a mistake since he was the only plumber in town, so he probably won’t go to their house anymore.
Accidental, rural, North American, small towner here for thirty-two years, population 3,500. Observed plenty of this lately:
– Price wise, the time to move here was at least five years ago, with housing and rentals having quadrupled since then to a now exponential rate. A new garage or even car port costs more than a house used to.
– Even previously unwanted lots, swamp, steep or rocky are keeping the local contactor / builders busy with tech cube designs that so don’t fit into the ambiance, but they easily sell their spec or custom built to newcomers.
– Try and find one of the few local contractors, good luck, they are making hay, inflating prices and working on local ‘Jamaica time and customs’ which endlessly frustrate the new, instant, big city neighbours.
– The new trend seems to be build a cube with built in suite to rent and spend all day / week sitting inside WFH trading stocks in the casino.
– The e-vehicle’s battery freezes, is pointless in steep mountain roads and soon gets traded in for an ICE 4wd truck (Tacoma’s selling like hot cakes) or SUV. And that new fat tire winter bike was ‘fun…once’, in the below freezing, five-month long snow season.
– The new, mega dog(s) cause a ruckus and are soon fenced (walled) in ‘from the bears’ in a town previously without fences but are walked on the paths that now overflow with their deposits.
– Municipal triple tax increases over the years…lets not go there.
What happens when every book and cranny of the US equilibrates in terms of real estate? Where to go when housing has been bid up everywhere?
Greenland looks better and better.
So, moral is to .. Learn to Plumb!
I had a relative who was an architect in LA then moved to the Sierra foothills for a slower pace of life, he ranted frequently about the quality of local contractors.
My youngest son works for an IP law firm writing patents for tech companies. He has the option of working in the office or working from home. But the one condition for him ,and everyone else in the firm is that upon a one day notice he has to be in the office ,in a suit, at his desk for big client visits. He only lives a few blocks away so it is no big deal, but it does constrain him from moving to Vermont. I think when this all shakes out WFH will be much more common but the fantasy of living far away in some remote vacation town will not.
You’ve picked the most unusual example to base your theory on. The percentage of people who have to be ready to show up at their office in a suit with one day’s notice is vanishingly small, practically non-existent.
Some in Miami are worried about an eviction tsunami. There might be more evictions and foreclosures than can be easily processed. Landlords are eager to evict. Some landlords are retirees who depend on rental income they are not receiving. Some renters ran up a big tab and might move without paying. The tourist industry is in arrears.
I agree this needs to be talked about!
With nationwide eviction moratoriums there’s going to be hundreds of thousands of people evicted all at once. When mortgage forbearance ends, there will be hundreds of thousands of foreclosures all at once.
All that supply will hit the market all at once – a tsunami of supply washing over limited demand.
Everything that’s happening right now with real estate prices is merely the beginning, the bow-shock of a huge wake that’s coming.
I think people are talking about (esp here), and traders/investors aren’t ignoring it… REITs across the board have barely bounced from their lows after +6 months…
And to think that these houses are some of the most available collateral backing any loans on the market now… lol
The reits will either have to dump houses to pay the dividends, or cut the dividends. So either way it’s bad, either crash the stock market or the housing market.
Petunia-to quote the Bard from ‘The Merchant of Venice’: “…oh my daughter! Oh, my ducats!…”.
Or maybe Jack Benny confronting the mugger…
May we all find a better day.
Markets are all connected, major repricing on expected returns in one area will spread to others. The cashflows from various forms of real estate is expected to be fungible. With no flows, one can not leverage it in other transactions/securities.
The “snowbird season” would normally be getting ready to start here in SWFL (Tampa and south).
Since tourism is the engine that runs FL, it will be interesting to see how the federal (GOP) and state (GOP) botched response to Covid-19 is going to further impact us.
So far, it looks ugly….
Not all the techies are 30, some are close to retirement and have no reason to stay in an expensive, over regulated city, with no quality of life. Get ready for the exodus of the older wealthier techies as well. Many may now be in senior positions and know they can last longer in a less stressful, more affordable environment. All signs point to “it pays to walk away” and “if you are going to panic, panic first.”
There is no large cohort of tech workers over 50.
I wasn’t referring to a large group, I was referring to the group that makes the decisions.
I didn’t start working as a software engineer here in Silicon Valley until I was 50. I retired as a senior engineer when I turned 69.
You gotta admit that makes you pretty unusual. Did you have many associates in your age cohort? What was lunch like?
In my last 5 years in the industry I worked with hundreds of devs from the US and abroad and none of them were over 35. Dev managers were rarely even 40. At 45 I was the same age as the CEO and even older than the chairman at a public company worth a $1.5B in ’06.
there’s a lot to tech besides software. i work in broadcasting. most of the techies have gray hair. yes, it’s a niche but there are lots of niches out there. the bosses would love to get rid of us and underpay some “digital natives” to replace us but the kids lack the skills. might have something to do with spending your career free-lancing instead of apprenticing as was the system back when we were trained.
Painting my kitchen today. Listened to real estate show from Raleigh, NC. Residential housing supply has gotten extremely tight, I believe the realtor said tightest in 25 years.
The market was real hot in ’07 too, just before it tanked for the better part of a decade.
1) The 18Y tech surfing, that started in 2002, is over.
2) The top x20 projects that generate profit, with good prospects, will be promoted.
3) The bottom, the losers, will be cut, to save capex, OH & payroll. To CHOP the pyramid above.
4) SPX leaders of the pack are beyond peak.
5) NDX up from 4K in 2016 to 12.5K in x4 years was the biggest wave to take
6) The old techies are too conservative for the sun and big waves fun.
7) Young SF dreamers are waking up : the new startups, will get no funds. 8) SF tech center will be disperse all over the world.
9) Easy money flow from the trillion plus co to the beautiful little guppies. 10) Left behind, got no attention or love, when everybody admire the big whales.
11) Without Fed support : a small 15% slice out of AAPL, or AMZN can buy bargains for life, in the next bottom fishing.
12) Why risk unrealized gains in NDX to surf on the next big wave from 12.5K to 36K.
Someone today suggested the petrodollar would be replaced by the pharmadollar. Right now China provides the raw materials, but intellectual property will be in places like the Golden Triangle in SD. The empire is always ending to be restarted somewhere else. You can’t design drugs in your basement, or on a laptop. Read to your baby from an organic chemistry text.
Wait – don’t they keep the IP in Ireland for the taxes? Maybe we should all move there?
You mean the narcodollar. Small ecological footprint, unlimited demand, and high velocity, and solid customer approval, as long as you keep the spigot open. What could go wrong?
I personally think that Corp will have smaller satellite offices across the Country. Folks can WFH& Corp will fly folks to hotel conference centers for a few days every 4 to 6 weeks. It will be cheaper for Corp. I may be crazy, but, it could end up cheaper for Coro& happy, motivated employees.
Great news!!! So SF, NYC, Chicago, Portland, Seattle, LA are trying to become China’s version of “Ghost Cities”. I couldn’t be prouder of the mayor’s and city councils of these cities. Keep up the great work!
So what should they have done differently?
New York constantly re-invents itself. It needs the “creative destruction” of a natural recession/deflation to relocate capital and create opportunities for the young and the bold. Overall this is all very good and healthy for New York, assuming it’s local government gets a federal bailout.
> creative destruction
> federal bailout
creative destruction’s “goodness” tbd by whether is a federal bailout or not?
I can only testify to my little world here in Seattle, but it is really grim. Some nice apartments in my west Seattle neighborhood have been up for rent for months, I think home prices have been holding so far – but I don’t think it will last much longer. This place is a -WRECK- an absolute wreck.
They closed our main access bridge in March because it was ready to fall down and left west Seattle a virtual island. Downtown is an abandoned emptiness of boarded up business, broken windows, empty streets, closed everything. We’ve been shrouded west coast smoke repeatedly. The homeless have taken over parks and the anarchists regularly riot set stuff on fire.
In my mind it really is nothing less than apocalyptic. I have never seen anything anything like it. End of the world stuff, for real.
Nah man,,, just another revolution of the wheel of the life we lead, as all of We the Peedons have been living for eva!!
Consider for a moment the Great Plagues that swept through parts of the world for the last thousand years or so, carried slow or fast, but with a certainty that this virus also travels around the world to a similar scenario. But, it all ends at some point.
As then, so now, everyone will be exposed to this virus and its effects, either sooner or later or in some cases both,,, and everyone who is going to die from it will die from it; as Wolf and others have said so clearly, the various and sundry efforts to slow the virus are intended to allow the medical services delivery system not to be overwhelmed as has been the case early on.
Not to worry, it will all be as it will be, or IOW, it is what it is, eh?
After the real estate prices crash to the bottom the artists might move in. They start the life cycle of a city over again.
Not for long, their houses and cars will get broken into and their stuff stolen. Property crime has been ridiculous here and gets worse all the time.
Even when we had a somewhat functioning police force my downstairs neighbor (and I live in a nice neighborhood) had her car stolen here *three times.*
Even artists don’t want to put up with that shite.
@gardener1 Real artists don’t have cars.
I read once about the real estate ‘life cycle’:
It starts with the nice new development, it gets slightly run down (cheaper) and then really run down (ghetto), then it gets redeveloped and starts all over again as a “nice place”.
Everywhere is either on an upswing or a downswing of the pendulum, I suppose. Some moving slowly, others fast.
NYC and SF go through these cycles where they become boom towns and then they decline enough that actual artists, free thinkers, and innovators are able to afford living there again. My guess is that both will decline massively over the next two decades and then both will rise from the degradation and dystopia to rule the world again. As for the rentiers in both cities – they will most likely die before the next boom and will sell their huge investments so they can move to Wyoming and Colorado or go to their graves regretting that they lost so much that they couldn’t have taken with them anyway.
“Now, there’s no reason to spend $5,000 a month for a one bedroom”
Was there ever?
Lou Reed opined on his 1989 New York album: “Does anyone really need a sixty thousand dollar car?”
After their first icy and windy winter or two, or after their first muggy and buggy summer or two, many Californians who left here may try coming back, especially those who have lived here most of their lives.
“It seems to me that those who wish to get ahead — you can’t get promoted from your bedroom — make sales or meet like-minded employees for friendship or just to get the hell out of their sweatpants will demand a real office the day after we have a month of zero infections.”
This is on the money.
Why is NYC so expensive?
The amenities have been severely compromised for now. When they return so will demand for residential living. I used to live there. I could have made about the same money in Boston but I preferred NYC. Why? Because that’s where all the action was. People want to live near the action. It’s not in Idaho or on a video conference.
SF has bigger problems it seems.
I think one thing workers who think its great working from home, cutting their rents and pulling the same salary, is that is very short term thinking. As soon as the company thinks the work can be done anywhere, it will migrate to the cheapest location.
The 19th century American economist Henry George who was the first advocate for a universal basic income paid for by a land/wealth tax, made a startling revelation that wages were NOT set by how good the person was, how profitable the business was, but mainly by rents/land prices of where the work was being undertaken.
A nurse in London for instance is not better/more productive than elsewhere but the authorities feel the need to pay more for the same work, ditto with the system known as ‘London weighting’ and salary setting by private companies themselves. Why do all the major companies pretty much end up in London then? It is primarily the social effect of top executives feeling the need to be at the ‘centre of things’. As soon as a southern manager gets apponted to the top job of a company in the cheaper north of England, pretty much his first act is to try and get the head office shifted. This has gone on for decades. Often the excuse has been ‘we need to be near the City’ or ‘we need to attract the best talent from a larger pool’ etc. etc. How does this stack up in a world of work from anywhere?
So be careful young people if you make your work too spatially independent.
IT will stop growing or may go into decline. There is a slate of reasons for it
– we have truly reached the end of Moore’s Law. Further progress while it will happen is going to be slow and expensive. The fact that Intel is now struggling keeping up should be proof enough
– IT saves labor cost. But what if labor becomes cheaper? There is political pressure to address the balance of labor and capital costs. High unemployment, universal healthcare and some shift of taxing from labor to capital will all impact ROI of IT spending
– Less money injected into economy via credit for capital IT projects making it harder to run companies solely focused on growth with no profits. Yes, the economy likely will get propped up but continuing to throw money where there is more than enough has stopped making sense a while ago. Large amounts of money will be needed by the state to stabilize the economy over the next few years and most likely that money will be printed and spent via the budget.
There still will be progress, there still will be new fields to apply IT to but the pure IT oriented tech giants