Amid the depths of a global pandemic and financial downturn, the demand for real estate is unexpectedly rocketing in wealthy regions outside San Francisco, reports Bloomberg. Agents say that demand is soaring in affluent areas around the Bay Area such as Napa, Marin and further afield in Carmel, as people who have the means look to get away from the city. Meanwhile, the market in San Francisco and Alameda County is still well below where it was last year.
Elsewhere, Lake Tahoe has also seen a surge in real estate interest. The prospect of living out of the city on an alpine lake while maintaining a career is appealing for a new generation of young buyers, as many tech companies have signaled that remote work may be the new norm for a long time…
Meanwhile, the rental market in San Francisco has dropped significantly, with rates for one-bedroom apartments in the city dropping by 9.2% since June 2019, and hitting a three-year low.
However, buying a new home in an isolated haven in a nearby bucolic county is not an option for lower-income San Francisco residents, and some believe the trend is only exacerbating the wealth divide.
And, as noted in the final paragraph of the story, it is hard to know whether this is a long-term trend. But, this is one of the advantage of wealth and resources: residential options during times when many others are limited in where they can live. And this is not just limited to where they can live; it includes being able to travel back and forth easily, owning or renting multiple properties at the same time, and having all the resources for working from home.
More broadly, the evidence cited above is interesting in that people moving out of the city are not said to be moving very far. They are still within a drive of San Francisco/the Bay Area/Silicon Valley. Are people in the Bay Area more willing to stay close by or do they have to due to work (a need for at least some in the tech industry to be at meetings, see people and products, etc.)? Does this differ from New York City where many of those moving ended up in the suburbs while others left the metro region all together? Staying in driving distance changes the moving experience.
I am also imagining the possibility of a more significant migration than some wealthy people heading for the suburbs or other cool metro areas. What if Facebook said they want to get out of the petri dish of Silicon Valley, be a different kind of tech company that really wants to connect people, and picks up for Omaha or St. Louis or another smaller big city in the middle of the country? Clusters of organizations have particular synergies and efficiencies but if more workers are going to be at home, is there still the same need to locate near everyone else?
Related earlier post: the evidence for this happening in Washington D.C. may not be as strong.