The COVID-19 pandemic had an immediate and direct impact on the housing market that continues to play out. The market should eventually normalize, but there may be more enduring effects.
Many experts are predicting a long-term exodus from high-cost urban locations like New York, Chicago and San Francisco. As the National Association of Home Builders phrased it, “High density lifestyles…proved to be vulnerable to a virus due to crowded living conditions, dependency on mass transit, and insufficient health and public sector infrastructure.”
According to a new Harris poll, nearly a third of Americans are considering moving to less densely populated areas in the wake of the pandemic, USA Today reported. Urbanites (43%) were twice as likely as suburban (26%) and rural (21%) dwellers to have recently browsed a real estate website for homes and apartments to rent or buy, the survey showed.
Plus, hundreds of thousands of urban offices workers now have the option to work remotely.
Facebook CEO Mark Zuckerburg said he expects that about half the company’s Silicon Valley-based workforce (currently 48,000 strong) would work remotely over the next five to 10 years. Silicon Valley neighbors Twitter and Square both announced that virtually all their employees will have the permanent option to work from home.
The CEO of tech-driven real estate company Redfin, Glenn Kelman, told analysts on a May 7 earnings call that the aversion to big metro areas was already underway before the health crisis, driven by a housing affordability crisis. The pandemic is just going to make it happen faster, he said.
“More people will leave San Francisco, New York and even Seattle, some for nearby towns like Sacramento and Tacoma that are close enough to support a weekly office visit, others for a completely remote life in Charleston, Boise, Bozeman or Madison,” Kelman said.
And it’s not just people leaving the metropolises. Jobs and companies will be relocating too – and some will be coming to Cleveland.
The relaxation of work-from-home policies could create some momentum for big firms to diversify their workforces geographically, Bloomberg reported. This could be a boost for cities like Cleveland, Cincinnati and St. Louis, where salaries are lower as a result of a lower cost of living. Such cities also offer an educated work force and an attractive quality of life.
On June 1, the Wall Street Journal reported that the San Francisco-based online personal-shopping service will eliminate the positions of about 1,400 stylists based in California and “hire about 2,000 stylists in Dallas, Pittsburgh, Cleveland, Minneapolis and Austin, Texas, beginning this summer, and going through 2021.” The company said it was getting increasingly expensive to operate in California.