Twitter, Microsoft, Facebook, and Google have all announced some form of hybrid work post-covid, where they will let their employees work from home 100% of the time or at least more of the time than pre-covid, permanently.
Some folks at some of these and other tech companies had already started to move, e.g. to be closer to their family in another city, or buy a bigger estate farther away from work. Now, they are thinking of making these moves permanent. Overall the # of options folks can pick from for their living situation has gone up more than 10 times in some cases.
Beyond the cost of the building itself, I think of real estate as deriving its value from having small local oligopolies. For example, if someone needed to be able to get to work within 10-30 minutes for five days of week, they had a limited number of available multifamily landlords to rent from. Now that they don't have to go to office at all or go only 2-3 out of 7 days, for folks to keep the same total commute time per week, they could have more than 10X the number of multifamily landlords they could rent from. Same goes for the number of options of houses they would look at before and what they can look at now. I understand things are not that simple as some people will still want to be in a certain area because of family or school district, but prices are determined by marginal supply/vacancy. In Detroit, 20% vacancy had a huge impact on house prices. For prices to be impacted, all it would take is a small percentage of folks exercising their options to pick from suddenly increased # of options.
In the public markets, if we suddenly had a company's oligopoly position destroyed such that we had 10X the number of companies available to buy the same product, that company's profitability and value would fall drastically.
What do folks think would be the % degradation of real estate values where the oligopoly position has gone down to the level of suddenly 10X the number of options being available to buyers. Could it approach to becoming a free market where cost of housing comes down to cost of actual building itself in some cases as is already the case with rural homes, where some folks are moving?