Goodbye, San Francisco

Due to the coronavirus and remote working, the trickle out of San Francisco has turned into a stampede. And unlike past exoduses [digression: exodi? 7th-grade Latin kicking in] those who are leaving tend to have higher incomes and valuable technical skills.

(WSJ graphic)

Tech companies are giving their employees more freedom to work from anywhere. Employees are taking them up on the option to relocate, forming the beginnings of a shift that could reshape not only the Bay Area, but also the cities where these tech workers are making new homes...

Google-parent Alphabet Inc. last month said employees won’t be returning to the office until at least the summer of 2021, in part so they can sign one-year leases somewhere else. Facebook Inc. recently said its employees could stay away for that long too. The social-media giant, which has 52,000 employees, expects to shift to a substantially remote workforce over the coming decade, and is now recruiting a director of remote work. Other companies including Twitter Inc. and Slack Technologies Inc. have declared most of their employees can work remotely for good...

Around 40% of Facebook’s employees were interested in permanent remote work, CEO Mark Zuckerberg said in May, citing an internal survey. Three quarters of those employees said they might move to another place. Facebook declined to say how many employees have formally requested to relocate.

A survey of 371 Bay Area tech workers, conducted in mid-May by the recruitment marketplace Hired, found that 42% would move to a less expensive city if their employer asked them to work remotely full-time. Another survey at the end of July by Blind, a platform for workers to discuss their jobs anonymously, found that 15% of more than 3,300 Bay Area professionals who responded had left the region since the pandemic began—though it was unclear how many considered their moves to be temporary. Of those remaining, 59% said they would consider relocating if their companies allow it.

It's nice but not necessary to live close to the
company HQ. (Largest rent decreases in red--WSJ)

While it’s too soon to measure the total net outflow of tech workers from the Bay Area, it’s already affecting real-estate prices. Rents have started falling for the first time in years. The median rent for a one-bedroom apartment in San Francisco in the month of July dropped by 11% compared with the same month a year prior, according to rental-listings platform Zumper, which analyzed nearly 11,000 listings in the city and several surrounding areas. In Cupertino, home to Apple Inc., and Mountain View, home to Google, the median rent for one-bedroom apartments fell by more than 15%.

“The majority of techies in the Bay Area are not about to move out, but it is a significant enough minority that it’s moving the market,” said Zumper CEO Anthemos Georgiades. “This year is the first year that it’s actually real.”

While the pandemic has slowed or stalled rent increases in cities nationwide, San Francisco stands out, said Joshua Clark, an economist at real-estate search service Zillow. Rents in the city have fallen for the first time since the firm began tracking in 2014.

“The fact that San Francisco has turned negative, that is rare,” Mr. Clark said. He attributes that in part to the heights that San Francisco’s housing costs had reached before the pandemic.

Those who are leaving the area permanently cite a variety of reasons, but high housing costs tend to be at the top of the list. Between 2009 and 2019, the median cost of a single-family home in the San Francisco Bay Area nearly tripled to around $1 million. Even renting a bunk bed in a room with five other people can cost over $1,300 a month.

The region is expensive in other ways too. Getting a cheeseburger and fries delivered can easily cost $25. An ice cream cone can cost $7. Before the pandemic hit, classes at boutique gyms routinely ran $30.

A large departure of tech workers could have significant implications for the industry, the Bay Area, and for other cities across the U.S. seeking to draw more tech jobs, say executives and analysts.

We are about to enter a vicious cycle where a shrinking tax base and rising government deficits (blamed on COVID-19) will lead to ever higher taxes on those who remain, causing more people to leave, etc.

As we wrote three months ago, The COVID-19 San Francisco Earthquake of 2020 has occurred, but not many people realize it yet.