[quote=deadzone]A lot of big companies, Silicon Valley and otherwise, have announced going back to the office 3 days a week starting in April. I just used Amazon as a prime example (no pun intended), not generalizing.
I’ve heard from piggington sources, other RE blogs and all over mainstream media that high paid FAANG type workers moving to San Diego to remote work were a major factor in house price run-up in San Diego. (Personally I believe it was a minor factor at best) Now that Covid is over and many (not all) workers will be returning to office in the near future, common sense says that trend will regress at least to some degree.
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Ok, specifically with people that relocated.. Do you think that people who did relocate here from higher cost areas, would simply move here, make one of the most important financial decisions in their life (buy a house), and move their entire family down here, just on a whim, without any sort of long term plan or assurance from their current employer that their remote arrangement could continue….That is, they didn’t arrange for one possible cases:
1: they found a new job here, and quit their old job
2: they are important enough to their current company and ensured that 2-3 years from now that covid is better, they wouldn’t have to relocate back to the company
3: they work for a company with satellite offices down here such that if they ever had to return to an office, even it was for a few days in the week, they could do so by returning to a satellite office down here
4: they work for a company that requires then to show up every so often (monthly, every 3 weeks, etc), and are reasonably reachable by car or train etc.
There’s plenty of people I know that fall into each of those categories above, including my tenants. SDR’s neighbors also falls into many of those categories.
If you are correct (which I highly doubt since most normal people and normal families actually put a lot of things into important decisions like buying a house and raising a family before relocating everyone), we should soon see people moving back to where they have to work now and a desperate need of a paycheck, in 2-3 months time and there should be MORE housing supply on the market in 2-3 months time…
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You guys are so focused on the job growth in San Diego as the reason everyone is going to continue moving here and driving up prices (wait, I thought it was the weather and lifestyle?).
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Um, you are using the term “everyone” No one else is. Some people are moving here because those people, specifically in biotech/life sciences have one of the best opportunities right now here in san diego, simply because the dollars poured into biotech/life sciences into San Diego is pretty large lately, especially after covid.
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I worked in the tech industry during the .com bubble and I am seeing so many similarities that it is scary. What happened to all of those .com era startups, many in San Diego? I know a great many that evaporated. If the stock market collapses like in 2000 (and currently it appears well on its way), a lot of jobs will be lost. And with current housing and rent prices, a lot of folks will be leaving San Diego.[/quote]
In tech, there will always be things come and go and something new happens. I agree, the dotcom era brought a lot of people that were in the tech industry that didn’t really belong there and that were not really qualified to do. So when they had to cut heads, they cut people that were expendable that weren’t really tech rooted (B and C quality workers that personally I could get myself to hire, but for some companies, they just wanted bodies)….When the dotcom bubble imploded, yes those people got washed out and couldn’t find any other tech jobs, because they weren’t really competent to be in tech to begin. But here’s the thing: if it wasn’t for the dotcom bubble, they never would have had the chance to make a lot more money given their limited abilities. So for them, jumping into tech, even as unqualified as they were, was an opportunity of a lifetime (albeit short lived).Most of them didn’t hit the stock option jackpot that they were hoping for, but a lot of them for a short period of time were overcompensated for the (lack of tech) skills they had. When the music stopped, they simply went back to their normal paying jobs they had previously, and let the higher paying tech jobs left to the people who really knew what they were doing.
But, take a look at the bay area housing market:
If you are correct (that a large tech contraction would cause housing prices to drastically correct), then why is it when the .dotcom imploded in 2000-1 and a lot of people lost their jobs, home prices in the bay area didn’t massively correct between 2001-2003? I was there in and out , and can confirm that there was some mild price changes, but it was really just noise. Rent prices in Santa Clara also did not materially decline: the rental we have there never had an extended vacancy or rent price reduction during those time, it stayed around $3500/month for 1600 sqft SFH in Santa Clara and kept going up as early as 2004. The only major price correction happened in 2008-2012 during subprime bubble, like everywhere else (which is why many of us are calling that an opportunity of a lifetime…)…There wasn’t a major price correction right after the dot.com bubble burst. If we didn’t see a massive foreclosure/price correction in the Bay Area (which is heavily tech concentrated) during the dot.com implosion, then again, why do you think any sort of contraction in tech here will have a drastic affect on home prices in SD overall, which is far less tech concentrated than the bay area????
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Speaking of relocation and working remotely in SD. Working remotely from SD isn’t really new…Some people have been doing this as early 2001/2. It’s just now a lot more people are doing it because a lot more companies find it acceptable post covid. Not every company will accept it, but a lot more company find it acceptable than back in 2001 when I did it. And even if terms change, people who were given that option to begin with are usually important/skilled enough to buy enough time to adapt to the change.
For me, after being in the bay area a few years and after 2 IPOS and 1 acquisition, I wanted to move back to San Diego. I decided to do this in 2001, when the dot.com imploded and many people were unemployed. Relative to everyone else, financially I was fine and in the worst case, if my employer didn’t allow me to work remotely, I would be in no worse shape then everyone else that got laid off in tech. So I resigned and told my employer I needed to relocate to San Diego for personal reasons. We ended up working out a remote work arrangement for 1 year, so I could transition my team to someone else while I worked remotely from SD until something better came along. During that year, I didn’t really look that hard, and when 2002 came around and my employer didn’t allow me to continue working remotely, I took on some contracting gigs, mainly because my significant other felt bad that I didn’t find anything yet…The contracting gigs paid well even during the tech blowup, but it wasn’t my long term lifestyle I wanted. Every Friday, I hopped on an SAN-SFO flight and came back SFO-SAN either on Saturday or at the latest Sunday. And, I wasn’t the only person on that flight that did that. That Friday flight was packed with techies that traveled between SFO-SAN or SJC-SAN. Even with that housing was cheaper, lifestyle was still better. I continued contracting gigs for 1 year until I found an opportunity down here with a large company HQ’d in bay area with a large office down here, and my comp package was close to bay area comps…
I don’t think too many people working remotely in SD for a company in LA or SF would have any logistical issues in doing what I basically did 20 years ago. That’s certainly better than some people I know who work in the defense sector that have to drive to Malibu from Poway 1-2 days each week, who have been doing this for some time.
