As we look toward post-pandemic economic recovery, it’s clear that some of the changes brought about by COVID-19 will be long-lasting. This is the case with remote work policies, with an increasing number of companies looking to offer this option permanently.
Such a shift could inevitably affect Silicon Valley, the tech hub of the world, as well as San Francisco’s notoriously expensive housing market. In fact, two out of three techies now say they might leave the Bay Area if their companies allow it.
Are we about to witness a mass exodus of workers from San Francisco? And how would it impact property demand and prices in the area?
The future of the Bay Area – without tech workers?
Currently, a total of 9,928 companies are headquartered in the Bay Area, with the average founding date of April 2011. The strong, tech-driven Bay Area economy, limited home inventory, and historically low interest rates ensured that property prices haven’t seen radical fluctuations throughout the pandemic. With additional tech money coming to the market, some believe prices could see steady growth in the months to come.
However, remote work policies could change that. Not only would they allow companies to save on rent and other overhead costs, but it could also encourage employees to relocate to somewhere much cheaper.
While Twitter and Shopify have already implemented a permanent work-from-home option, companies like Facebook, Google, and Microsoft confirmed they would allow this arrangement at least until the end of 2020. Either way, it’s undeniable that the tech industry is entering a new, remote era – with the concept of the Silicon Valley becoming further decentralized.
Changing real estate fabric
Silicon Valley will continue to be a global destination for those starting a tech company or career, but it’s true that we could see a certain cool off in the years to come. We can’t expect most Google employees to suddenly abandon their family houses and move to Texas – rather, there will be more subtle changes to the fabric of San Francisco’s real estate market.
While wealthy home buyers are increasingly looking to leave the dense city, they aren’t exactly going far. In fact, a new Bloomberg report found that they are looking to affluent, more suburban corners of the Bay Area, such as the wine country.
Rather than seeking just a temporary solution, residents are actively looking for housing options, with some agents saying that they’ve never seen such demand. Whether it’s Sonoma or Napa Valleys, attractive areas – even if outside San Francisco – are likely to see a rise in demand in the future.
The market remains hot
The San Francisco real estate market recorded a decrease in sales throughout March and April, while prices have seen only slight fluctuations. May’s statewide median home price was $588,070, down 3% from April and down 3.7% from May 2019. However, pending home sales already mounted an impressive comeback in May, seeing a 44.3% monthly increase after two months of steady decline.
Supply levels sunk at the beginning of the pandemic, with people hesitant about selling their properties. With the promising uptick in inventory, it’s clear that the situation is now changing again. San Francisco was one of the areas where active listings were up by over 10% in May, showing signs of market reactivation.
It’s too early to tell whether the remote work shift will impact demand and prices further, but it’s obvious that the option itself is already giving many people an opportunity to rethink their housing options. This could potentially serve as a catalyst for further home purchases, especially in affluent areas further away from the city.
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