Remotely working: Rent market signals
Tech hubs such as the Bay Area are loss leaders in rent prices.
"Remotely working" is a weekly newsletter discussing remote work.When people recite the benefits of remote work, they often mention “work from anywhere”. No commute, no need to live close enough to work.
The tech sector is a leader in the movement to remote work now and is the sector where we have the most companies that declare remote is here to stay. Even after the pandemic situation is over.
The tech sector is leading the remote work movement for obvious reasons. And with COVID-19, a massive amount of companies declared they
Rent prices move slowly. It takes time for contracts to be over, and for people to take the decision to move out. Even after moving out, you need a strong enough indication for landlords to decide to change their prices. More so when the change is down.
But in San-Francisco we already see a movement, that is an outlier to other cities in the US.
-11.80% YoY change for 1 bedroom apartment in San Francisco
-9.60% YoY change for 2 bedroom apartment in San Francisco
According to Zumper rent report.
San Francisco one and two-bedroom apartments are the biggest losers of any city in the US YoY.
Small apartments are a great way to look into the future. Usually, the tenants are singles, paying the high rent to work in the tech sector in the Bay Area.
They can quickly and abruptly move once they deem it not worth it to stay in place—one person's decision, in a small apartment without many things to move.
To me, this rent prices movement means two things:
People are largely betting that remote work will invalidate the benefit of a “tech hub” for at least 1-2 years. Once we will see a significant drop in 3 and 4 bedroom apartments, it’ll be safe to say the outlook has a larger horizon.
Cities such as San-Francisco can’t justify their high cost of living without job opportunities. Eliminating job opportunities, cities will start to compete on quality of life.
Remote work will not only change how we work, but how and where we live as well.