Published November 11, 2024
The Rise of remote work and how it effects Bay Area real estate.
The concept of remote workers existed before the Covid 19 pandemic, but the shutdown skyrocketed the amount of work from home staff out of necessity. During shelter in place times, companies all over the Bay Area learned through trial and error, how to run things with their employees operating remotely, from their homes instead of in office. Turns out, it wasn’t entirely necessary for a large amount of the work force to be on site full time, things functioned sufficiently without their presence in house. Especially due to the nature of the tech industry, which is particularly prevalent in the Bay Area, remote working has become a highly viable and popular option.
There are lots of ripple effects stemming from this workplace shift, namely in real estate and transit in the Bay Area, and in other places as a result of Bay Area workers fanning out.
Firstly, the supply and demand for housing, both for purchase and rent, has been a point of contention in the Bay since forever. Although the demand still out weighs the available inventory, work from home trends loosened the need for immediate proximity to business headquarters in the city. The result has been a slightly relaxed price point. This isn’t saying a heck of a lot considering how incredibly high the cost to rent or buy housing had become, but it loosened the tension on a very tight wire, being the need for so many people to pack into so little space in order to get to the location where they work.
Bart is a stark example of the lessened-on site work force. Commuter mornings on the train were standing room only, packed in like sardines, and crowds on the platforms. BART riders have been closely linked to regional office occupancy. The rise of the remote workforce has greatly decreased the number of train riders. A SFIST article published October 16 of this year, states that in 2024, Bart ridership has cut down to 37% of what it was pre pandemic. That’s the dregs, it has really been affected by the lack of commuters needing to get to work.
In an article from local Kron4 news, November 1st, they wrote that currently 14% of California workers have home hours incorporated into their weekly schedule.
Starting in pandemic years, from 2019 to 2023 Sacramento saw the greatest rise in remote workers at a 236% increase. San Jose came in close second at 235% increase and San Francisco had a 230% leap. The direct correlation between those increased numbers, and the lessening of traffic has been quite simply, awesome. The Kron4 study found that the effects were a 12% decrease in traffic levels in Sacramento, and a 10% decrease in San Jose and San Francisco. Traffic certainly still sucks, but hey, we’ll take it.
Now while this trend is nice for cities that experience a lot of congestion, it’s not great for towns that lots of Bay Area people moved to while having the freedom to work anywhere.
Cities like Tucson and Salt Lake City both reported a 6% increase in their traffic congestion during the same time period and that’s not a coincidence.
Census bureau shows 54,000 Californians moved to a city like Tucson in the past year. Bay Area residents who were acclimated to the very high price tags of homes in this area, had the freedom to spread their wings, and purchase homes in highly affordable areas, with lots of space, for the first time maybe ever. The domestic migration of Californians to other states brought those home values up. Notably in states like Tennessee and Idaho. In 2022, 20,000 Californians moved to Tennessee. Homes in that state went for three times what they had gone for the year before.
In 2021 Idaho topped charts with the most people having moved to that state out of any other state in the country. Guess where the lions share of them came from. Hint hint…
In 2022 Boise Idaho had become the top hottest real estate market in the country. Idaho, given its proximity and available beautiful properties, became the most affected state in the country by Californians mass exodus. In 2022, Californians were making the move on buying properties in Idaho site unseen, no inspections, just a lot of excitement and a sense of urgency to get in there before you can’t. Now by 2024, due to inflation, interest rates and people staying put where they’re at, that hot market has fizzled out. The mad rush has chilled out and like so many other real state markets in the country, pre-election and such, it’s just calmly being what it is, quiet.
In reality, it’s a trip to see how far reaching the effects were of the change in workplace requirements, just stemming from the Bay Area alone. 2023 Census Bureau found 735,000 Bay Area workers were clocking in from home. That’s enough people to make an impact! On cost of living, commuter traffic, and much more.
These days we’re seeing a lot of tech company layoffs, and more requirements for folks come back into the office, for at least several days a week. The three-day work week is a popular concept in the tech industry, still allowing people 4 days where they don’t have to be in the city to work.
With that being said, a lot of people are still finding ways to live further out to reap the benefits of smaller town living. The realization that it could be done came to be during the pandemic, and it spurred long lasting change in how both employers and their staff view that option. Especially in the tech world where work is primarily done online, it broadened the perspective of what working for a tech company means. This spreads in both positive and probably really annoying ways, across the whole country. The tech industry hub being here , gives this area condensed wealth and influence. The opportunity to make these high incomes, and impact economies in other parts of the state is a new phenomenon that’s definitely injected new economic growth in beautiful, but stagnant rural areas.
