Author Topic: Percent loss in value of residential real estate oligopolies due to hybrid work  (Read 3393 times)

LearningMachine

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How steep the demand curve is matters as well. There are absolutely people who currently either don't live in expensive cities or take long commutes solely because they can't afford to live closer. Small drops in price have the potential to increase demand from people who are priced out of the market.

The demand to relocate out of expensive cities seems to be high according a survey by Blind, which verifies employees by asking them to provide their company email address.

Roughly third are willing to relocate even with a pay cut.  In addition, 40-45% will relocate without a paycut, depending on city/company.

Here are results broken down by company and by city:
https://www.teamblind.com/blog/index.php/2020/09/14/44-of-professionals-are-happy-to-take-a-pay-cut/
https://usblog.teamblind.com/wp-content/uploads/2020/05/PayCut.pdf
https://docs.google.com/spreadsheets/d/1zF_jxowBZYkiJIeatZAm3soelVBpoFf1TbjEZVwxBpA/edit#gid=171959972
« Last Edit: October 13, 2020, 08:55:59 PM by LearningMachine »


KJP

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How steep the demand curve is matters as well. There are absolutely people who currently either don't live in expensive cities or take long commutes solely because they can't afford to live closer. Small drops in price have the potential to increase demand from people who are priced out of the market.

The demand to relocate out of expensive cities seems to be high according a survey by Blind, which verifies employees by asking them to provide their company email address.

Roughly third are willing to relocate even with a pay cut.  In addition, 40-45% will relocate without a paycut, depending on city/company.

Here are results broken down by company and by city:
https://www.teamblind.com/blog/index.php/2020/09/14/44-of-professionals-are-happy-to-take-a-pay-cut/
https://usblog.teamblind.com/wp-content/uploads/2020/05/PayCut.pdf
https://docs.google.com/spreadsheets/d/1zF_jxowBZYkiJIeatZAm3soelVBpoFf1TbjEZVwxBpA/edit#gid=171959972

I don't think that's the demand curve Bizaro was referring to.  You appear to be trying to identify the number of people currently living in cities who would move elsewhere if they believed they could.  I believe he's asking about the demand from people who would like to live in cities (or different cities) but currently do not because it is not practical for them (cost, location) to do so.

Is it possible that widespread WFH actually increases demand for certain cities, because people who historically had to work in say, Omaha, Des Moines, Little Rock or Tulsa can now live in NYC,  Boston or LA?  Likewise, is it possible that housing in Minneapolis becomes more in demand because WFH frees people from living in, for example, Duluth?

Put another way, your comments seem to assume that people are in cities because that's traditionally where good jobs have been.  But what if it's the other way around:  Goods jobs are traditionally in cities because that's where people want to be?  If it's primarily the latter -- and if the desire to live in cities going forward has not changed -- when how would widspread WFH affect demand for urban housing?

Applying this framework to the Detroit example, vacancies were high and housing prices low, not just because people left but also because other people did not want to move in. 
« Last Edit: October 14, 2020, 05:10:42 AM by KJP »

LearningMachine

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Put another way, your comments seem to assume that people are in cities because that's traditionally where good jobs have been.  But what if it's the other way around:  Goods jobs are traditionally in cities because that's where people want to be?  If it's primarily the latter -- and if the desire to live in cities going forward has not changed -- when how would widspread WFH affect demand for urban housing?

Totally agree that high tech employers want to be able to attract top talent wherever they are.  This is why big tech companies are leasing new NYC office sqft even in the middle of the pandemic.  They want to be able to attract the top technical talent in the biggest metropolitan region of almost 20 million people.

My point is that the game has changed a little.  In order to attract and retain top talent, tech companies are now also competing over offering WFH and hybrid work benefits.  This means for that newly hired Facebook engineer, he no longer is required to get to office daily, and his/her desirability of being able to walk to work has gone down, and the living options for that engineer have gone up quadratically within the region. The desirability of being close to cities is still there, but his residence doesn't have to be walkable distance to work.  Now, that engineer might still want to be in the wider city region of slightly bigger radius for dating life and other reasons, e.g. expanding their desired region from within 1 mile of work (pi * 1 square mile) to within 10 miles from work (pi * 100 square miles).  However, for folks with families, dating infrastructure might not be as important a reason, and they can expand their radius for the area farther from within 1 mile of work (pi * 1 square mile) to within 20 miles of work (pi * 400 square miles).

The desirability of being close to cities is still there, but work doesn't have to be in immediate vicinity within the region anymore.

I am already starting to see that folks who used to want to live within 1 mile radius of work are now willing to look much farther out within the region, while still having access to all the city has to offer.
« Last Edit: October 14, 2020, 09:59:46 AM by LearningMachine »

LearningMachine

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Is it possible that widespread WFH actually increases demand for certain cities, because people who historically had to work in say, Omaha, Des Moines, Little Rock or Tulsa can now live in NYC,  Boston or LA?  Likewise, is it possible that housing in Minneapolis becomes more in demand because WFH frees people from living in, for example, Duluth?

What do we think is the buying power of each of these folks working for a company currently located in a city that is not very expensive compared to the buying power of the analyst or software engineer working for a company that had already picked to be located in a big city for talent?  Probably lower, right?

While WFH a lot more of the time will be standard, WFH 100% of the time will probably take some time to pick up.  Assuming it picks up for some percentage of these folks and that these folks are able to move, what is the radius of the area they will be targeting within their new region?  Will it be 1-mile radius (p* 1 square mile) like it was for some of those rich analysts and software engineers, or will it by 20-mile radius (p* 400 square miles)?  Probably latter, right?
« Last Edit: October 14, 2020, 10:40:18 AM by LearningMachine »

Gregmal

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There are two very distinct groups in the big urban based workforce. The younger folks, work to play. They want to be in the city. Not half an hour away. Then theres the older crowd. They work to support families and lifestyles. The latter is flexible. But the former? Dont think so. 25 year old tech/finance bros dont want to live anywhere but where the action is.

There was a piece recently posted somewhere(might have been here, I forget) about how the current 30-40 age group, the one that largely drove rental rates across the country through the ceiling the past 10 years, are shifting significantly towards home ownership. The most preferred areas are about 15-25 miles from urban centers.

bizaro86

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How steep the demand curve is matters as well. There are absolutely people who currently either don't live in expensive cities or take long commutes solely because they can't afford to live closer. Small drops in price have the potential to increase demand from people who are priced out of the market.

The demand to relocate out of expensive cities seems to be high according a survey by Blind, which verifies employees by asking them to provide their company email address.

Roughly third are willing to relocate even with a pay cut.  In addition, 40-45% will relocate without a paycut, depending on city/company.

Here are results broken down by company and by city:
https://www.teamblind.com/blog/index.php/2020/09/14/44-of-professionals-are-happy-to-take-a-pay-cut/
https://usblog.teamblind.com/wp-content/uploads/2020/05/PayCut.pdf
https://docs.google.com/spreadsheets/d/1zF_jxowBZYkiJIeatZAm3soelVBpoFf1TbjEZVwxBpA/edit#gid=171959972

I don't think that's the demand curve Bizaro was referring to.  You appear to be trying to identify the number of people currently living in cities who would move elsewhere if they believed they could.  I believe he's asking about the demand from people who would like to live in cities (or different cities) but currently do not because it is not practical for them (cost, location) to do so.

Is it possible that widespread WFH actually increases demand for certain cities, because people who historically had to work in say, Omaha, Des Moines, Little Rock or Tulsa can now live in NYC,  Boston or LA?  Likewise, is it possible that housing in Minneapolis becomes more in demand because WFH frees people from living in, for example, Duluth?

Put another way, your comments seem to assume that people are in cities because that's traditionally where good jobs have been.  But what if it's the other way around:  Goods jobs are traditionally in cities because that's where people want to be?  If it's primarily the latter -- and if the desire to live in cities going forward has not changed -- when how would widspread WFH affect demand for urban housing?

Applying this framework to the Detroit example, vacancies were high and housing prices low, not just because people left but also because other people did not want to move in.

That is exactly what I meant.  :D

I think places that are desirable for lifestyle reasons will probably remain desirable for those exact same reasons.

CorpRaider

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Yeah I'ma fade this.  Youngs trying to get dates through the local church group so they can go get some papa johns?  Nah man.