Author Topic: Changes in Vacancy and Rent in Major US Cities in 2020  (Read 2919 times)

maizefolk

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Changes in Vacancy and Rent in Major US Cities in 2020
« on: December 17, 2020, 08:04:15 PM »
I found this analysis dataset interesting.



Makes me glad I'm not a landlord but I hope those of you who rent out units in the biggest US cities are doing okay.

If you go to the original site, you can also see the opposite patten (rising rents and declining vacancy rates) in second tier cities like Boise and Albuquerque, exactly the sort of lower cost, high quality of living places one could imagine moving to if you worked for a tech giant, used to live in San Francisco and can now your tech job remotely.
« Last Edit: December 17, 2020, 08:49:21 PM by maizefolk »

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #1 on: December 17, 2020, 08:40:27 PM »
Maize,

There is nothing profound about this and I wouldn't call it an analysis, either. It's simply supply and demand.

This is just the COVID effect. The real question is what will happen in a few years. Will this trend continue or reverse?
« Last Edit: December 17, 2020, 08:42:20 PM by PMJL34 »

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #2 on: December 17, 2020, 09:00:09 PM »
That vacancy rates and rents are negatively correlated is not surprising. That rents are down 20+% in places like New York and San Francisco was surprising to me. Particularly as that suggests landlords aren't expecting a rapid recovery of demand. If they did, it'd be cheaper in the longer term to let apartments sit vacant a few more months than to bring in people on leases at much lower rates (and also giving a precedent to other tenants in the same building who can likely use the lower rates given to new tenants to negotiate their own rates down then leases come up).

In fact, earlier in COVID that's what we mostly saw. Landlords were willing to offer one or more free months or other sweeteners to get tenants into vacant units, but were much less willing to cut their baseline rent. Consider this story from New York City in June:

https://www.nytimes.com/2020/06/18/realestate/why-rents-havent-dropped-in-new-york-city.html

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #3 on: December 17, 2020, 09:53:13 PM »
Maize,

You beat me to it. I'm in the bay area and everything here is pro tenant and rent controlled. Therefore, what I have seen is free month's rent or no deposit, or whatever...basically anything except for lower actual rent.

Even with those incentives, the rent dropped big time. It is certainly a cause of concern. What's even crazier is while rent prices are dropping, the house prices jumped :)

Again, this was all sort of expected due to COVID (well not the increased house prices, but neither were 2% 30yr mortgages). Vaccine is out now, COVID certainly changed our lives, but it won't be forever. The million dollar question is, what happens next?


waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #4 on: December 17, 2020, 10:07:50 PM »
I'm a subscriber to the "Covid jumped us 10 years into the future" model of understanding things.

You could, pre-Covid, have probably predicted that way more people would be able to work remotely in a decade. Well, here we are. Lots of companies that resisted letting anyone WFH were forced to try it - and they're going to have a hell of a time getting anyone to come back.

Hence my prediction, which is worth just as much as you've all paid for it: rents will permanently drop in many prime cities. Prices will follow over time.

Cheap places that are somewhat cool where you can work remotely will continue to get more expensive. So we'll essentially have a broad-based leveling out of RE prices and rents, though obviously there will still be significant differences from place to place.

-W

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #5 on: December 18, 2020, 10:16:29 AM »
Walt,

I subscribe to that theory too. I would argue that major/world class cities were that way for a reason, with or without COVID. People will always flock to coastal living, beautiful weather, city life, amenities, etc. For this reason, I think we will see a strong rebound in major cities because people do want to live where "it's at." I agree that the appreciation won't be as insane because a lot of money will go to suburbs or other major cities. Therefore, the "other" more affordable cities will continue to see higher appreciation.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #6 on: December 18, 2020, 10:27:06 AM »
Sure, but *part* of the desirability of NYC/SF/LA/Tokyo is working in some form of tech/finance/etc.  The exact amount of appeal is subject to debate but if most of those workers can go remote, even if nightlife/amenities are back post-Covid, I'd bet a lot of them leave permanently. For every hipster hitting concerts there's a young family stuck in a crappy little apartment but making big bucks for Chase. The hipster isn't going anywhere, the family is already gone. Even if only 10% of your demand goes away, that has a HUGE effect on rents and prices.

For what it's worth, I sort of wish this weren't the case. All those people moved to my town and now I have to go mountain biking at weird times/unpopular places because of all the people.

-W

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #7 on: December 18, 2020, 01:08:35 PM »
Yup there are two reasons people live in super expensive cities: for the culture/experience and because it pays a lot more.

Since our society already seemed to be, slowly, heading in the direction of more use of remote work, a big permanent jump in that direction would be very consistent with the "advanced us 10 years in 10 months" model of looking at permanent changes. If covid really has permanently broken the expectation that jobs which can be done remotely should be done in person because that's how we've always done things, I think that even once we get the vaccine under control (hopefully in the next twelve months) will still be really quite bad for the some of the biggest biggest land-limited cities (Boston, San Francisco, New York City, Seattle). DC might be different. Government is much slower to change than tech or finance.

A couple of days ago I was on a call with a fellow who works at a google subsidiary. He mentioned something about not being able send texts on his phone anymore, and it came out he's moved from SF down to South America to live near near his fiance's family. Found a place with fast internet and none of us on the call could have told the difference. Unless his employer requires him to start coming to work in person, I just don't think he and folks like him are headed back to those big tech/finance hub cities again. I think the choice of either the digital nomad lifestyle or or putting down roots in a lower cost city picked based on your own preferences (climate, culture, proximity to family) instead of where you got offered a high paying job is going to be really appealing to the folks who have tried it out this year.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #8 on: December 18, 2020, 02:28:26 PM »
There's talk of converting office buildings into condos, too. I don't know how realistic that is, but if you have reduced demand AND increased supply of housing, that could crater rents and values (probably a good thing!) in big cities.

I'm usually wrong. But if I was forced to bet on this, I'd say that Covid and WFH will level things significantly out by crushing cities (not necessarily instantly) and boosting lots of suburban/rural places.

-W

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #9 on: December 18, 2020, 06:38:15 PM »
I hear the both of you and agree with a lot of it. There's no debating that COVID was not kind to SF/NY.  However, many locals aren't happy with the tech crowd anyway so I'm not sure what the net gain/loss will be if they leave. I'm curious as to what % of the NY, SF, etc. are high earners that only moved here for work. And what percent would move out if the high paying job wasn't here/done remotely. I say this because there's certainly going to be a large exodus of tech workers, but I think the population will be filled by the average joes like me that just want to be in the city. For SF, I think the location, weather, and culture will be enough to attract an abundance of people. Plus the ultra rich will always want status by living in/or at least owning a property in NY/SF. I just don't see a decline or SF not being mega popular. It's location is amazing in that you can go to the ocean in 10 minutes, countless nature and hiking in 30 minutes, Santa Cruz in 1 hour, Tahoe/snowboard in 2-3 hours.

Basically: Is the # of tech workers who want to leave and work remotely in more suburban/rural areas big enough to cause major damage?

Now the tech workers certainly have a lot of money and the appreciation going forward in SF will be slower.  I don't see a decline though.

PS I'm always wrong too lol
« Last Edit: December 18, 2020, 06:39:58 PM by PMJL34 »

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #10 on: December 18, 2020, 08:18:49 PM »
However, many locals aren't happy with the tech crowd anyway so I'm not sure what the net gain/loss will be if they leave. ... Basically: Is the # of tech workers who want to leave and work remotely in more suburban/rural areas big enough to cause major damage?

Isn't the reason locals aren't happy with the tech crowd because the tech workers are driving up rents? If so, it seems hard to think that tech workers coming in would drive up rents but the same folks leaving wouldn't drive rents down.

Whether losing a bunch of high paid tech works a net good for the quality of living of those still living in the cities, losing a bunch of high paying tenants would be a win for the remaining renters and a big loss for existing landlords. The supply of rental units is extremely inelastic, so even modest changes in demand can produce big changes in price. If the average joes who want to live in SF and don't could afford to pay current SF rental rates, they'd have already moved into the city*. In SF proper, typical apartments were renting for close to $3,700/month right before the lockdown. The median household after tax income in California is $4,200 So if landlords find themselves with too many vacancies they'll have to drop rates enough to make it viable for people who otherwise couldn't afford to live there to make rent in the city.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #11 on: December 18, 2020, 08:44:30 PM »
So, um, you can live cheaper AT A SKI RESORT, or at the ocean, or etc. than you can in SF. The proximity to cool stuff is terrible! Half an hour to go for a hike? Move to Bozeman or Carbondale or etc and you can hike out your back freaking door and pocket the extra million bucks equity/$5k a month in rent.

SF is a great city. But what you're extolling is available for a fraction of the price in lots of places - so long as you don't care about the city (culture, high paying jobs) part. That's the point here.

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Paper Chaser

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #12 on: December 19, 2020, 04:57:20 AM »
All of those well paid tech workers supported a lot of unique small businesses too. There are a lot of unique coffee houses, delis, florists, etc that relied on spending from these office workers in downtown areas. When they can't survive, the city becomes less appealing to everybody.

There was some data from the lockdowns that suggests small businesses in the wealthiest zip codes were hit hardest by the pandemic because their entire customer base simply disappeared:

https://www.bloomberg.com/news/features/2020-09-24/harvard-economist-raj-chetty-creates-god-s-eye-view-of-pandemic-damage

https://www.bloomberg.com/news/articles/2020-12-09/nyc-s-coffee-cart-woes-spur-2-million-grant-from-morgan-stanley

gary3411

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #13 on: December 19, 2020, 08:39:37 AM »
All of those well paid tech workers supported a lot of unique small businesses too. There are a lot of unique coffee houses, delis, florists, etc that relied on spending from these office workers in downtown areas. When they can't survive, the city becomes less appealing to everybody.

There was some data from the lockdowns that suggests small businesses in the wealthiest zip codes were hit hardest by the pandemic because their entire customer base simply disappeared:

https://www.bloomberg.com/news/features/2020-09-24/harvard-economist-raj-chetty-creates-god-s-eye-view-of-pandemic-damage

https://www.bloomberg.com/news/articles/2020-12-09/nyc-s-coffee-cart-woes-spur-2-million-grant-from-morgan-stanley

Was just going to post this exact thing. THIS is the hidden effect most don't see coming. Without the tech workers, so many of those cool little shops will close. Not saying it'll be New York in the 70s bad, but the golden years of big cities are over forever IMO. Well, at least until every other cool little spot with decent internet is overrun.

gary3411

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #14 on: December 19, 2020, 08:43:33 AM »
And it's not that people won't want to live in these big cities. Plenty will. But they won't be the ones with huge disposable income. The ones with huge disposable income in a way "subsidized" the sweet living of the others in the past. It'll be different.

Padonak

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #15 on: December 19, 2020, 08:54:57 AM »
A 20% drop in rents is not enough. I'm waiting for 50%. Even then places like Manhattan would still be too expensive for what they have to offer.

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #16 on: December 19, 2020, 11:01:44 AM »
Maize,

The locals aren't super excited about the stereotypical techie because they aren't neighborly. As in they don't interact with the neighbors or get involved in the community. They also don't support neighborhood small businesses as much as you think. A typical Google employee takes the google bus (aka no bridge toll revenue and no BART revenue). They eat breakfast lunch and dinner at Google. The tech people hang out with other tech people on the weekend as well. These aren't people who are shopping at neighborhood stores, they shop at online. It's the hipsters that support the local boutiques. The reason business was hit hardest in downtowns is obvious, they had zero customers due to COVID. I don't think it was unique to the tech sector specifically. And you can't take the California median wage and then compare that to SF proper rents :) Rents already peaked in 2017 and were decreasing because it was too ridiculous, COVID dropped it faster. I believe it will end up where it's supposed to be (I have no idea what that number is, but the $3500/studio average wasn't sustainable). Now with all that said, I fully acknowledge that any number of tech exodus could have huge implications. I just don't know if it's going to be as dire as expected. And as mentioned, I do believe an overwhelming majority of techies will want to stay in SF even with WFH.

Walt,

Name me a better location/weather/culture combo than SF :) Not a ski resort that is in operation only in the winter. I'm talking ocean, mountains, lots of green, culture, restaurants, museums, shops, the whole 9. I think LA/SD could challenge it, but it doesn't have nearly the amount of green/outdoor.


Paper Chaser,

I think your point is true. However, it's not unique to tech industry. Every downtown that became a ghost town was equally damaged.

Gary3411,

I hope that major cities can become more diverse (income wise). However, SF/NY will always attract ones with huge disposable income (tech or not) because it's a world class city. I fail to see how tech folks "subsidized" our living. I would argue the opposite, they raised the price of everything :)



 

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #17 on: December 19, 2020, 11:37:47 AM »
And you can't take the California median wage and then compare that to SF proper rents :) Rents already peaked in 2017 and were decreasing because it was too ridiculous, COVID dropped it faster. I believe it will end up where it's supposed to be (I have no idea what that number is, but the $3500/studio average wasn't sustainable). Now with all that said, I fully acknowledge that any number of tech exodus could have huge implications. I just don't know if it's going to be as dire as expected

It's quite possible we're actually not in disagreement. My view is that with tech workers getting a taste of the potential of remote work (and tech companies getting a taste of being able to hire people at lower salaries if they don't have to pay bay area rents) rent in places like San Francisco will continue to be well below it's pre-coronavirus levels even after the population is vaccinated. I'm not sure how much below, so if your view is also that there will be a sustained decline just not as dire of one as expected there is no contradiction there.

I'm a bit more confused what your objection is to comparing pre-COVID rents to income elsewhere in California. Where do you think the average joes who would move to San Francisco/the Bay Area to replace leaving tech workers would come from if not the rest of California (or other states with even lower median incomes)? Also, keep in mind that while SF is one of the richest places in California, it's not that much better off than the state as a whole when you include all residents. In San Francisco proper the median household is only making $6,500/month pre-tax (call it somewhere between $4,500-5,100 post tax).* The bay area is one of the richest places in California and even so people were still getting squeezed horribly by rent.

Also I'm curious about your mention that SF rent peaked in 2017. The numbers I'm looking at are highest in late fall/winter of 2019 which is still pre-COVID but given month to month fluctuations is enough for me to have thought prices were just continuing to increase until COVID changed the demand side of the equation. Since is sounds like you have on the ground knowledge though and my own on the ground knowledge of that city is the better part of a decade out of date, I'm quite prepared to learn that I was wrong in that conclusion.

*Things aren't quite as bad as $4,500 month median income with a $3,700 month rent bill due each month might sound since a fair number of folks in SF have been living in apartments under rent control (rent can only increase 60% of the local consumer price inflation rate each year) for long enough to be paying well below market rate rents.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #18 on: December 19, 2020, 11:40:50 AM »
Look, the point isn't that SF sucks. It's awesome. The point is that there are a lot of people who are mostly/only there because of their jobs. They'd rather live at the resort, at the ocean, in the mountains, closer to their family, or just somewhere cheaper. It doesn't take all that many of those people leaving to drastically affect property prices/rents. We've already seen the *proof* of this happening due to Covid (and I can provide a dozen anecdotes from my own town, we're swamped with Bay area folks who have bought up everything on the market), the only question is whether people will all come right back in 6 months or whether they'll decide they like living elsewhere.

-W

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #19 on: December 19, 2020, 11:58:38 AM »
To agree with what Waltworks said, the point here is not to tear down cities like New York, San Francisco, or Seattle.

If I could live in San Francisco and pay rent/mortgage comparable to what I pay today, it'd be tempting. The access to restaurants and interesting things to do and so many different parts of nature would weigh for it. The higher incidence of crime, homelessness, and poor gender ratio that skewed the dating world (at least back when I lived there) would weigh against it.

It's just that everyone who has the option to move to San Francisco but is not current living there chose not to, whether consciously or unconsciously, because in their personal calculus of the benefits (both to their income and more intangible things like culture and climate) vs the costs (both in terms of rent/mortgage and more intangible things like crime, traffic, and public school quality) the costs outweighed the benefits.*

New people are only going to move to San Francisco if some factor on one side or the other of the equation changes to make the move more desirable.

*Conversely, everyone who did choose to move to San Francisco did so because, consciously or unconsciously, in their personal calculus of the benefits (both to their income and more intangible things like culture and climate) vs the costs (both in terms of rent/mortgage and more intangible things like crime, traffic, and public school quality) the benefits outweighed the costs. So if you ask a person who lives in San Francisco, or Seattle, or Manhattan "do you think it makes sense to live here?" you'll get a very different distribution of answers than if you ask the same question about the same cities from people who don't currently live in them.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #20 on: December 19, 2020, 12:12:40 PM »
It's also worth noting that if you aren't concerned about being negatively affected by dropping rents/property prices (ie, you don't have your entire NW tied up in a condo in NYC or something), this is something that, in theory, would make SF/NY/etc MORE awesome, because you could attract younger and more diverse people, families, etc, and they could afford to live there.

It's making my town less awesome, really, because once you've met one middle-manager at a tech company you've mostly met them all, and now you don't see the random dreadlock ski bum who can tell 100 interesting stories and gets pulled around on a skateboard by her dog anymore because she can't find a place to rent. We were already white/rich retiree/tech industry person heavy, and this is making it worse.

-W
« Last Edit: December 19, 2020, 12:14:18 PM by waltworks »

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #21 on: December 19, 2020, 09:52:31 PM »
Again fair points Maize and Walt.

I by no means meant to say that SF was the greatest city in the world. I was just saying that it has a lot to offer, so much so, that even if one group of folks leave (tech), others will want to join. Just to be fair, SF has terrible NIMBY, homeless, and it's really homogenous (whites and asians) now outside of some students and rent controlled folks.

Yes, rents peaked in mid-2017 and it plateaued for a while and even declined in 2019. 2020 was obviously terrible.

Maize, HUD defines "low income" for singles who make less than 82k. families who make less than 117k are "low income." That's why I didn't feel the median income of Cali was meaningful. When I said average joe, I meant SF average joe (for example a city worker in SF make 100k). I doubt that many people leave SF for any other reason than cost. It's really the only thing I've ever heard people say. It's just not fair or fun for the average joe and I do hope that (like Walt said), we can have hippies and hipsters come back. Now, they will most likely need to rent rooms in shared housing and even then pay large portions of their income to rent, but hopefully we can get to that affordability soon.

In terms of figures, I think that a 1 bedroom in the city for $2500-3000 will be the going rate (Post COVID). The all time highs were as mentioned $3500 for a studio in 2017 and that's just unhealthy. 



waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #22 on: December 19, 2020, 10:14:34 PM »
I guess it's a bit of (for city folks) a Covid silver lining. Cheaper housing is a good thing for basically everyone, though maybe not if you own a bunch of leveraged property you were counting on to appreciate (which, cough, cough, a lot of people here over the last few years were...)

I just wish the former Bay Area folks weren't all moving here. My neighbors obsessively track real estate sales and want to talk to me about how much their houses are worth and I'm just angry I'm going to pay more property taxes.

-W

Paper Chaser

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #23 on: December 21, 2020, 08:01:57 AM »
Paper Chaser,

I think your point is true. However, it's not unique to tech industry. Every downtown that became a ghost town was equally damaged.

Like the others, I'm not trying to put your city down. My point was not that SF was the only city to struggle during lockdowns. My perspective is looking toward a future where working remotely is more common. If you were going to pick a single industry that's most likely to have the largest percentage of workers stay in a WFH format moving forward, it would probably be the tech industry right? We now know that there are lots of office jobs in lots of industries that can be done remotely, but I think a larger percentage of tech workers are probably going to remain remote workers as a result of this pandemic compared to workers in other sectors like finance, sales, law, HR, etc. So I think cities that have had a lot of tech workers are likely to feel the negative effects more (or longer) than cities with a smaller proportion of tech workers. Obviously my crystal ball is just as accurate as anybody else's though.

theoverlook

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #24 on: December 21, 2020, 08:21:37 AM »
I'm wondering how long it will take until companies realize they can pay remote workers a LOT less and still fill those positions. The pay premium their positions offer now are at least in part predicated on the increased cost of living of their office locations and attracting people to those locations. If they no longer need the workers to relocate, they can offer pay more comparable to the national median. And some work they can just move offshore and pay a fraction for it. Work from home cuts both ways - employers have more flexibility to shave costs too!

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #25 on: December 21, 2020, 10:52:31 AM »
Some companies are already doing this. Facebook and Twitter have said that they'll reduce pay for people who want to continue to work remotely, but facebook still expects up to half their workforce will take the deal and end up working remotely.

Quote
... Facebook and Twitter, which have said they will cut the pay of employees who choose to relocate away from their head offices in the pricey San Francisco Bay Area. Payments platform Stripe said it will offer employees $20,000 to help with moving costs but will then cut pay by 10%. Meanwhile, Software maker VMWare said it could reduce relocating staff salaries by up to 18%.

https://www.cnbc.com/2020/11/05/how-silicon-valley-facebook-salary-cuts-are-shaping-remote-worker-pay.html

ender

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #26 on: December 21, 2020, 11:42:07 AM »
Remote compensation in tech has gone up dramatically this year as well.

It's certainly the case that the top end of the top end might get cut off a bit in tech, but the reality is hiring in tech is hard and covid/remote hasn't changed it all that much.

My guess is that experienced software folks across 99% of the country will be able to make more as a result of covid and more remote work.

The places that got screwed were the pre-covid remote first companies, who now have a ton of competition in their hiring space.

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #27 on: December 21, 2020, 09:32:12 PM »
No offense taken at all Paper Chaser. I agree with everything you are saying. 

Again, living at ground zero, we have these conversations with friends, family, coworkers, online forums, you name it all too frequently. Most tech workers aren't leaving SF/Bay Area even with WFH. The tech workers that are leaving are the ones that can't afford to live here (mostly new tech folks that are young and just got here) or are the ones who were going to leave anyway. Many of the tech workers here enjoy a very comfortable lifestyle including a nice home in a nice school district with an awesome salary plus all the regional perks like parks, museums, ocean, mountains, weather, etc. Many already had the flexibility to work from home before the pandemic and many already did WFH. Again, if one can comfortably afford SF/bay area, people tend not to leave. I think the news headline is click bait in this sense that there is some major exodus.

The difference now is that new tech folks who would have immigrated to SF for work, no longer need to do so if it's fully WFH. Therefore, I would assume, the incoming flow of tech workers are very much down.

Also, FAANG companies are drowning in cash. None of them need to cut salary or are worried about their employee salaries. Skilled tech workers are/have always been in extreme demand. FAANG companies compete with each other to get the brightest of the brightest and they could care less if that person was local or not.   

Has COVID sped things up dramatically like Walt said? Yes, absolutely. But tech companies are built to handle this transition and thus thriving in the face of COVID.

Back to the vacancy issue in SF. I think that SF has a huge number of people coming and going every year for various reasons. I believe the inflow was very low due to COVID and many low income folks who were struggling left SF to lower COL places or back to their hometowns. The lack of students hurts the SF bay area as all public universities are closed (huge renter base). All of these reasons are much more significant than the so called tech worker exodus, IMO.  We shall see what happens over the next few years. My bet is that the city is appealing enough to rebound.
 
« Last Edit: December 21, 2020, 09:34:45 PM by PMJL34 »

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #28 on: December 21, 2020, 09:45:23 PM »
Put in a much simpler way:

No one wants to pay SF rent prices without the SF lifestyle (due to COVID lockdown).

My bet is that:

Plenty of people are willing to pay SF rent prices for the SF lifestyle (without COVID).

Again, we shall see.

EDIT: Also, let's keep in mind, this is for renters and vacancy. The SF housing market is doing just fine. Renters by definition in SF, are lower income folks compared to home owners. tech folks are mostly home owners unless they are young or new.
« Last Edit: December 21, 2020, 09:47:13 PM by PMJL34 »

FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #29 on: December 21, 2020, 10:55:48 PM »
Enjoying the discussion here. However it's taken an awkward turn for me, hitting a bit too close to home for comfort :) I was a middle manager at Google before FIRE, am an avid mountain biker, and moved from the Bay Area to Boise this year. [This was all in the works before the pandemic.] Walt, we live in different areas, but if I ever run into you on the trails I promise not to bore you with tales from the office.

Dissatisfaction was already a thing in the Bay Area pre-pandemic, with nearly half of survey respondents contemplating leaving. Talk is cheap, no idea how many had concrete plans to relocate, but that's a huge percentage of unhappy people.

To be clear, I'm not trying to hate on the SF Bay Area which, as PMJL34 points out, has many great attributes. And we look forward to going back to visit as tourists once COVID blows over. But the Bay Area doesn't have a monopoly on quality of life, with many equally wonderful alternatives across the US depending one what one is looking for. I much prefer 4 seasons, with hot dry summers and cold snowy winters. I have hiking and mountain biking trails a few blocks from my house, yet can still walk/bike to a proper downtown when I crave the city life. Being ~30 minutes from our front door to on the mountain skiing is way more interesting than proximity to the ocean. Besides, I find the ocean overrated and would rather be near alpine lakes and rivers. So while cities are great for day to day life, they're even better when I can be in real wilderness away from crowds, with great fishing/camping/hunting in ~1 hr.

TL;DR - I'm of the opinion that JOBs were the primary anchor for many in big cities. It's what brought so many there, and if remote work is here to stay then I don't see why they would stick around. Those that really truly love the Bay Area because it aligns with their preferences will stay put and be happier with less traffic and lower housing prices. Good for them!

Paper Chaser

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #30 on: December 22, 2020, 04:03:03 AM »
Put in a much simpler way:

No one wants to pay SF rent prices without the SF lifestyle (due to COVID lockdown).

My bet is that:

Plenty of people are willing to pay SF rent prices for the SF lifestyle (without COVID).

Again, we shall see.

EDIT: Also, let's keep in mind, this is for renters and vacancy. The SF housing market is doing just fine. Renters by definition in SF, are lower income folks compared to home owners. tech folks are mostly home owners unless they are young or new.

I think you're right that most cities overall will be just fine. My point about tech workers and remote working had more to do with the non-tech workers that make their living supporting the tech workers. The deli owner that relied on the daily lunch crowd. The coffee shop that closes because they can't make it work when the customer base of office workers and college students are staying home (wherever that may be). The street vendor in NYC that needs Wall St financiers or fashionistas in the garment district to pay the bills. The cab drivers. The office cleaning crews that get downsized because the offices are barely used.

The people that work in those jobs are a lot more likely to be renters than the office/tech workers that patronize those businesses. Referring to the link I posted upthread, we know that those are the people that have been hurt most by the pandemic thus far, and as long as the office workers stay away, they'll continue to be. That's going to put negative pressure on rents (as we've already seen in the most expensive cities). Additionally, with every unique small business that closes as a result of my last point, the "SF lifestyle" (using SF as a placeholder for all cities) is damaged a bit and becomes just a little less appealing, which puts additional negative pressure on home values/rents.

I think FINate's point about ending up with a happier populace, that chooses to live in these locations because they want to not because they have to for work, is really insightful. I think what we'll see is "water finding it's level" so to speak. It may be a bit cheaper, and the people may all want to be there, but there may be less income diversity, more chain type businesses, etc too.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #31 on: December 22, 2020, 09:04:02 AM »
Some of this is just sampling bias - I'm only meeting the people who left the Bay Area, PMJL34 is only hanging with the people who are staying because he's a fan of the lifestyle.

As FINate (who I inadvertently insulted! I'm sorry, dude - if you head south sometime, let's ride and beer is on me! Just remember it's UT beer...) points out, a lot of people didn't like being in the Bay Area pre-Covid but didn't leave because $$$.

I think you can still buy a house in Boise for $500k or something (right?) and the mountain biking, skiing, and river stuff is great. If you owned a home in SF making that move makes you instantly FIRE in a lot of cases. And there are an awful lot of Boises (like mountain bikes and nordic skiing? You can buy a nice place in Houghton for $150k and the schools are great) out there with great stuff to do and very low COL. Nobody considered those places pre-Covid... because $$$.

I guess we'll see who really loves city living and who doesn't!

-W

FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #32 on: December 22, 2020, 09:28:45 AM »
No offense taken, got a laugh out of it!

It's still possible to find houses here for less than $300k. Smaller and a little further out, but not THAT far, maybe 5 miles from city center and all the fun stuff. Something similarly situated in the Bay Area would easily exceed $1M.

ETA: To add to Walts point about lots of Boises out there... as part of our relocation planning we did two long road trips to explore potential candidates. There really are a ton of great locations throughout the US, especially when one isn't physically tethered to a job. We like to say that one of the most difficult things about moving was deciding between too many wonderful options.
« Last Edit: December 22, 2020, 09:37:54 AM by FINate »

affordablehousing

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #33 on: December 22, 2020, 10:31:20 AM »
I live in the Bay Area, and have no plans to leave. I don't think there's anyone who totally knows how human behavior will change in the future. At some point, I hope, the risk of infection will recede and we'll be left with seeing who really wants to live where for what reason, and who has the oomph to escape the inertia of their own routine. Among our friends, Covid and the reality of living anywhere has prompted a lot of agitation. As we see commonly on this forum, most have the ability to FIRE quickly, few have the ability to thoughtfully understand what they'll do with it. Of course most of us could retire in a cheap city, but WHAT WOULD WE DO? I personally would be happy to see a rebalancing of population and have cities like SF get a little less crowded. Also, those that stay may be less a monoculture of tech bros and perhaps more a leaning toward the smattering of different cultures that existed more prevalently in previous decades.

I do think the loss of retail will be a real tragedy. I don't think we'll see any real changes though until home prices really drop.

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #34 on: December 22, 2020, 11:45:09 AM »
I appreciate all the input too. I don't know why I'm championing SF so hard lol. I'm not the biggest SF fan, but just trying to give it it's fair credit.

Paperchaser, I agree and I love local small businesses. My hope is that if tech leaves, another industry will replace it and the small retail will continue to chug on. SF bay area actually does a decent job keeping local businesses considering it's surreal costs. Many SF/bay area cities don't have Wal-mart and other chain stores to encourage the survival of small businesses.

Finate, appreciate the input and you're certainly correct that prior to COVID, 50% or whatever polled have stated that they "plan" to leave. But would you agree that this was 90+% due to the COL? How long were you in the bay area? Did you rent or own prior to leaving? Also, if you are FIRE, then you are in the minority already and live a very different lifestyle from the typical person. Cashing out of SF definitely makes FIRE easier.

Walt, there's certainly bias here, but I doubt it's very much. I see the people who come, stay, and leave. You only see the people who leave. Also, the reality is that white americans can go live anywhere in the US. Other ethnicities can't go to boise and utah as easily/comfortably. Even if this isn't true, the perceptions certainly say otherwise.






kenmoremmm

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #35 on: December 22, 2020, 04:05:42 PM »
we humans are locusts, so whatever 'boise' town is out there will soon be overrun and the appeal will be lost. see: seattle, boise, portland, denver, etc...

MayDay

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #36 on: December 22, 2020, 05:33:21 PM »
I am in my 30's. I am an engineer and an introvert. Maybe I am freakishly more middle of the road and close to extrovert than a lot of you but I fucking hate WFH and I hate all my interactions with my team and my suppliers being over Teams.

I don't think this remote transition will really occur on a large scale. There are to many people like me who either hate WFH or at the very least don't want to do it full-time. And although we've gotten by being very remote based in 2020, it certainly isn't ideal. When the SHTF it is still in person to figure it out.

I am not in software so maybe that doesn't apply to silicone valley. But for a hell of a lot of jobs that *can* be remote, I don't see them going full on remote to the point that rent stays low forever in SF and a million people move to each of the Boise's.

Maybe wrong! But I can't fucking wait to be able to have in person meetings again, to eat lunch with my coworkers, to problem solve on an actual white board, etc.

FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #37 on: December 22, 2020, 07:49:25 PM »
Finate, appreciate the input and you're certainly correct that prior to COVID, 50% or whatever polled have stated that they "plan" to leave. But would you agree that this was 90+% due to the COL? How long were you in the bay area? Did you rent or own prior to leaving? Also, if you are FIRE, then you are in the minority already and live a very different lifestyle from the typical person. Cashing out of SF definitely makes FIRE easier.

I don't know that it's mostly about COL as there are many quality of life issues highlighted in that survey. The HCOL certainly adds to the frustration, "I paid $1.5M for my house and have to deal with what?!" Certain issues are easier to overlook if a very high salary is the trade-off. But if you can more-or-less keep your high salary and move somewhere cheaper and without the headaches... kinda a no brainer, though not at all what I anticipated when the pandemic first started going down.

My wife and I were both born and raised in the greater Bay Area (if you count Santa Cruz/Monterey Bay as such... there's disagreement on this, but I digress). We owned our house (bought 2003) and were FIRE 5 years before relocating. We had deep roots there, and would never have considered leaving for trivial reasons, certainly was not just about money. It's difficult to pin it on any single thing, more of a constellation of related issues. However, one thing we kept coming back to was a conviction that our kids had no future there, and it would be better to make a move sooner rather than later for their sake. We don't expect them to stick around in Boise in adulthood, but at least there's a reasonable chance that they can make it here if they want to. And if housing gets crazy expensive (seems possible, though hope this doesn't happen) then they will have had the experience of moving and living in a different place and are not pigeonholed by a "the Bay Area is the best place in the world and I could never live anywhere else" attitude. Not accusing you of this, but it's something we've seen a lot.
« Last Edit: December 22, 2020, 09:22:15 PM by FINate »

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #38 on: December 22, 2020, 09:19:05 PM »
This discussion has reminded me of something I've noticed - I've been all over the US for all sorts of reasons and people are so darn provincial!

I can hang out in a bar in WY with a guy in a cowboy hat and a belt buckle and talk guns, I can hang out at a wine bar in a big city and stick out my pinkie and talk about opera (I'm trying to make this as silly as possible, but I actually can/have) and the people in both of those places will have NO IDEA what it's like to live in the other place and have all sorts of bizarre stereotypes about it that they believe. And they've never been there.

I mean, most people are really cool. Everywhere. And there's fun stuff to do in lots of places. Go check them out! You might even decide you want to live somewhere that isn't rural ID or downtown LA. Rural America isn't just meth-addicted hillbillies looking to shoot you. City folk won't make you get a sex change or mock you for being religious.

Again, no knocks on the Bay Area or Rock Springs. But I often meet people when I'm those places who love it because they have never experienced anything else, basically.

-W

ender

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #39 on: December 22, 2020, 09:40:21 PM »
This discussion has reminded me of something I've noticed - I've been all over the US for all sorts of reasons and people are so darn provincial!

I can hang out in a bar in WY with a guy in a cowboy hat and a belt buckle and talk guns, I can hang out at a wine bar in a big city and stick out my pinkie and talk about opera (I'm trying to make this as silly as possible, but I actually can/have) and the people in both of those places will have NO IDEA what it's like to live in the other place and have all sorts of bizarre stereotypes about it that they believe. And they've never been there.

I mean, most people are really cool. Everywhere. And there's fun stuff to do in lots of places. Go check them out! You might even decide you want to live somewhere that isn't rural ID or downtown LA. Rural America isn't just meth-addicted hillbillies looking to shoot you. City folk won't make you get a sex change or mock you for being religious.

Again, no knocks on the Bay Area or Rock Springs. But I often meet people when I'm those places who love it because they have never experienced anything else, basically.

-W

This comes up somewhat often and it's surprising to me this is surprising to anyone.



FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #40 on: December 23, 2020, 10:31:37 AM »
Found this article today essentially along the same lines as this thread: https://calmatters.org/housing/2020/12/remote-work-california-housing-crisis/? I think they have a point about the rebalancing being more pronounced in areas/cities within 2-3 hours of major cities, especially for not-quite-full-time remote work. Though I'll add that further out cities with decent air connections would also be a potential. E.g. live in Las Vegas (just to pick on another city for a bit), and fly in to SJC several times per month for face-to-face meetings.  I already know people that do this, not a big deal to fly in the morning and return same day. The cost of airfare is minimal compared to COL savings. Terrible w.r.t. GHG emissions, but people will do it.

One more thing to add specific to California: Prop 19, which very narrowly passed in November. This allows those 55 and older (and some others) to sell their primary residence and take their Prop 13 property tax basis to anywhere in California. It also removes the inheritability of the Prop 13 tax basis for children and grandchildren, which is good, this was always an awful bug in the system. It's no secret that the Real Estate Industry was the main proponent of Prop 19. They are commission based and this will drum up a lot more commissions. Around April 1, 2021 I expect at least a few more "family homes" hitting HCOL markets as retirees reason it's better to cash out and move somewhere less expensive and less hectic.

Will this actually happen? It's anyone's guess. But if I were planning to buy a house in one of the second tier cities in CA (Sacramento, Stockton, Fresno, Napa, etc.) then I might be a bit more urgent about getting it done before summer. Whereas if I were looking to buy in one of the expensive coastal cities I might consider waiting until spring to see what materializes. 
« Last Edit: December 23, 2020, 10:48:32 AM by FINate »

Sid Hoffman

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #41 on: December 23, 2020, 11:18:49 AM »
Paperchaser, I agree and I love local small businesses. My hope is that if tech leaves, another industry will replace it and the small retail will continue to chug on.

You must really like all those Hallmark movies where you can open up a bakery and make so much money that it keeps your downtown shop afloat and pays all your bills. In the real world small, local businesses simply do not end up producing the same kind of income as all those tech jobs. SF will obviously continue to exist for years, maybe forever, but this might have been the relative rent price (meaning rent relative to the median US income) maximum of all time. If enough of those big tech jobs leave then I don't think housing prices and rents will ever go back to the peak we just saw crested.

IMO that's a good thing. Sure, there will be lots of foreclosures, lots of bankruptcies, but just like the 2008 housing collapse and all its bankruptcies and foreclosures, life goes on after that. Reset the typical housing costs to permanently 30% lower than the 2019 peak and SF doesn't look so bad.

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #42 on: December 23, 2020, 11:22:23 AM »
For the record, I would have defended NY, Tokyo, Paris, or any other number of world class cities. I am simply saying that SF folks are not worried about tech WFH/potentially leaving. It's a world class city and something else will fill any void. SF is not Detroit. I'm done defending SF, end of story.

Finate,

You have to remember you are one of the few who left the bay area when your home, job, and family roots were there. You are a rare breed :). I also commend you for moving for your children. I do worry about how my children will fare in the future here. As you know, Prop 19 is flat out bad and only passed through deceit. Now my children may not be able to keep my home, that is definitely worrisome.

I definitely don't think it's bay area or die lol. I've lived around the world and know that every place has something to offer. I also skimmed through that article you linked. Come on, Fresno? Bakersfield? Stockton? Lancaster? For those that don't know, these are literally the worst rated cities for the past decade for quality of life. I do agree that cities like Sacramento, Vallejo, just generally more inland LA, and etc. will continue to boom. I recall that Sac was already one of the fastest appreciating cities even before COVID (and even more so since COVID). Again, the article is a guess. Like you said who the hell knows what will happen :) 

Walt,

I agree. People need to get out of their comfort zone and experience life, travel, meet new people, etc. However, making a home and settling down roots is a completely different thing and a big deal. As much as you can enjoy the privilege of rural Wyoming bar (or anywhere in US), unfortunately not everyone can. Again, by no means am I saying it's bay area or die. I have traveled extensively and continue to do so. We only get one life, might as well see the world :)     
« Last Edit: December 23, 2020, 11:24:41 AM by PMJL34 »

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #43 on: December 23, 2020, 11:28:54 AM »
Sid,

"You must really like all those Hallmark movies where you can open up a bakery and make so much money that it keeps your downtown shop afloat and pays all your bills. In the real world small, local businesses simply do not end up producing the same kind of income as all those tech jobs."

???

Other than that, I mostly agree with you that bay area folks aren't worried about tech WFH or not or the price becoming more reasonable (if you can call it that). I can confidently say there will be no 2008 housing collapse in SF/bay anytime soon. PS even 2008 didn't hit SF hard at all (compared to US).

FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #44 on: December 23, 2020, 12:08:57 PM »
I dunno, there are so many CA license plates around here, not sure how rare we are. DW and I both had roots going back 4-5 generations, yet most of our extended family has already left or is actively planning their exit. And a shocking number of friends confided in us that they, too, were planning to leave. It's not something I take joy in, don't need affirmation of our decision, but that's what seems to be happening. Nor am I rooting for the demise of CA as some sort of weird political statement. I want the best for loved ones still there and want everyone everywhere to thrive. Yet we too easily forget that Flint MI once had the highest median income in the US (1979, I think). Not saying SF is necessarily Flint but, to paraphrase Musk, I think there's a danger of becoming complacent.

Yes indeed: Fresno, Bakersfield, Stockton. I get it, it's not your jam, and that's fine. But for a lot of people, especially once kids enter the picture, owning a home with a yard becomes more of a priority. If a family can do that in these locations, on a single income, and still have better work life balance that's very attractive. And these places are much closer to the National Parks and the High Sierra, while still being within 2-3 hours of the ocean. The Bay Area has long ridiculed the Central Valley as "the armpit of California" but I think this is a terribly dated and unfair notion. Inland California is not some forsaken food desert. There are a lot of chain restaurants, but there are also many good locally owned eateries and farmer's markets and the like. And these cities also have attractive parks and reasonably nice downtowns. Stockton has struggled in recent years, but that can be an advantage for finding good deals.

I view Prop 19 as somewhat flawed policy attempting to fix some of the worst aspects of property tax policy. IMO Prop 13 is the root problem. Props 58 and 193 (property reassessment inheritance exclusion for children and grandchildren) were even worse which, given the legacy of redlining, were essentially a tax giveaway to affluent white homeowners under the guise of helping kids "save the family home." Sorry not sorry, I don't think a house should have special tax treatment just because the kids are emotionally attached to it. Sell it and split the proceeds. And if Grandma can no longer afford the property taxes on the $1M home that she bought for $50k in the 1970s then she can sell it and use the proceeds to buy something less expensive. Or, if that's just seems too harsh, then provide means tested tax relief on a case-by-case basis.

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #45 on: December 23, 2020, 04:40:10 PM »
Detroit was a hell of a world class city 50 years ago...

-W

PMJL34

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #46 on: December 23, 2020, 05:03:01 PM »
Walt,

Anything is possible, but I doubt it.

Out of curiosity are there any other US cities comparable to Detroit in their downfall?

EDIT: on second thought. Was detroit ever a truly world class city? As in attracted international travelers? I am only 34 so I do not know the full history other than motown music and car industry. If it was a world class city and became abandoned, that is truly nuts! I do have friends there and they claim Detroit is now booming. Hopefully it continues to bloom.

Finate,

You are doing a disservice to the readers promoting Stockton, Fresno, Lancaster, and etc. I don't even know where to start with those cities and how awful they are. I have family in all three cities, worked in them, and been there enough to know that it's beyond depressing. Just this year, Stockton was ranked 4th worst city to raise a child in (in the US). #1 and #2 were Bakersfield and Fresno lol. Lancaster probably didn't make the cut for metro city, but they would have been #1. Extreme weathers, terrible air quality, terrible crime, I could go on forever. Dude, not cool man. Has nothing to do with personal taste, it's objective truth.

Articles like this come out monthly about the cities above:
https://www.abc10.com/article/news/local/stockton/stockton-among-worst-raising-children/103-ab18ea9b-cc46-4982-92e0-707275f5590e

Double EDIT: I'm not going to say anything bad about you except for your recommendation of the above cities. I think this topic is very personal for you since you moved form bay area to boise.

I'll also say that I like the way you think. I really appreciated and enjoyed reading your input in the "Is humanity making progress, or regressing into the ditch?" and I'll continue to enjoy your two cents even if we don't see eye to eye. 

Edit: regarding CA housing crisis. I don't pretend to have an answer. I do agree with you that prop 13 is where it starts and ends. I also don't think it's fair to appeal it for a variety of reasons. Prop 19 does nothing IMO except benefit realtors and very select few seniors.
« Last Edit: December 23, 2020, 05:18:32 PM by PMJL34 »

FINate

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #47 on: December 23, 2020, 06:04:34 PM »
It's a truism that the wealthy have more opportunity. More wealthy people live in the Bay Area whereas fewer wealthy people live in the Central Valley, hence it registers lower average levels of opportunity. This doesn't make it a bad place to live, nor does it mean a wealthy person will be suddenly downgraded by moving there. Let's not confuse correlation with causation.

And I'm sure those living in Phoenix or the tropics are amused by labeling these places as having extreme weather. During summer Fresno averages a high in the mid-nineties with low RH, and it doesn't even average below freezing during winter. I worked in Singapore for a summer... that was hotter AND extremely humid, but you know what? I got used to it. No one there (or Phoenix) worries that the heat is somehow harming their kids. Air quality is different, but that's something each family has to weigh, and as we found out this summer the Bay Area isn't exactly free from air pollution.

This summer we had several weeks of 100+ and some people in Santa Cruz were freaked out worried about us ... yet we loved it! Hot days are wonderful for going to the lake/river, getting shave ice, and hanging out in the backyard late into the evening. Last year when we announced our intentions to move multiple people where like "OMG, it snows there!" So what?! We also love the snow. I go mountain biking when temps are in the teens and thoroughly enjoy it. I dress appropriately (not as heavy as many assume) and hit the frozen trails, admire the beauty of ice and frost, and take in the crisp air.

It's odd that you think I have some kind of personal agenda for arguing these cities are not bad places. You can love SF without tearing down other places. To be clear, I'm not saying the Bay Area is necessary a bad place or that it doesn't have lots of opportunity. For those in tech it makes a lot of sense (or, at least, it did pre remote work) to live and work there. However, there are so many people in industries that don't pay much (if any) premium to be there and it's sad to watch them barely squeak by year after year. They would be much better off exploring other options. Nor am I arguing that the Central Valley cities are all good (like all places there are pros and cons, and neighborhood matters) or are generally a good fit for everyone. It's never that simple. But I think it's a mistake to write them off without doing your own homework just because SF looks down their nose at them.

ETA: I should also add that Fresno has a lower crime rate (both property and violent) than SF [ https://www.bestplaces.net/crime/city/california/san_francisco, https://www.bestplaces.net/crime/city/california/fresno ]
« Last Edit: December 23, 2020, 07:05:37 PM by FINate »

waltworks

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #48 on: December 23, 2020, 06:34:44 PM »
That's an interesting question. I know lots of rust-belt cities in the midwest are poorer/crappier than they were 50 years ago (like Detroit). I know lots of smaller places that are one-industry towns that flourished 100 years ago and now barely survive.

But Detroit (indeed, an international elite city that people all over the world flocked to at the time) is the biggest example. And it might be an instructive one - it was dependent on one industry, and when that industry started being done competitively in other places (ie tech bros all working from ski towns instead of SF), it crashed.

I don't think SF is anything like as dependent on tech as Detroit was on cars, but it's certainly not nothing (as witnessed by the rent declines that Maize posted about). It's also vulnerable to climate change issues of all kinds (like this summer) and earthquakes.

-W

maizefolk

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Re: Changes in Vacancy and Rent in Major US Cities in 2020
« Reply #49 on: December 23, 2020, 06:39:47 PM »
Detroit at its peak was definitely a world class city. When auto manufacturing was the tech of its day, the GDP of Detroit rivaled that of many whole countries elsewhere in the world (the same sort of claim I remember people bringing up about the Bay Area when I lived there.) My guess is that Detroit probably didn't attract the number of international visitors simply because world travel is much more common today that it was 70 years ago. And the coastline of Michigan is gorgeous, it's a place I've thought about FIREing too more than once. It wasn't the same as SF, but there were all sorts of reasons it was a great place to live, and people moved to the city from all over.

You can still see some remnants of the cultural amenities which date back to that era. Even today the Detroit Institute of Arts is one of the top five museums in the country. The University of Michigan is another echo of that prosperity that continues on to today and is usually about tied with UC-Berkeley in the national rankings.

Now I'm certainly not predicting San Francisco will follow the same trajectory as Detroit. What happened to Detroit wasn't just a key industry moving from being concentrated in one city to be more dispersed across the country but also a series of riots that destroyed infrastructure and scared people with the means to move away.*

Is what happened to Detroit unique? No, although it's probably the most dramatic example (edit: in the US specifically). St. Louis used to be a boomtown and the fourth largest city in the USA and had a decline almost as dramatic as Detroit's. A more relevant but older example might be Philadelphia, one of the top cities in the USA for perhaps 200 years, but after 1950, while it never really crashed but also stopped attracting businesses and jobs to the same extent, so that it hasn't seem rental prices and property values spike to the same extent as other regional cities like NYC or Boston.

*I'm more worried something similar to Detroit might happen to Minneapolis but that is neither here nor there.
« Last Edit: December 23, 2020, 06:42:32 PM by maizefolk »