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I wanted to offer a few more thoughts on my new report about what happens when work goes remote. A big theme is land rents in superstar cities raise pay & cost of living in a way that creates opportunities for win-wins from remote work. A Q this raises is: what happens to cities?
I am not predicting the death of cities. But I am predicting change. First and foremost, I think this will erode some of the land rents. In fact you can already see rent prices falling in superstar cities versus secondary and lower cost cities https://twitter.com/NickatFP/status/1286023366709850118?s=20
Doesn't mean superstar cities will empty. One thing that could happen is in superstar cities its more affordable to live w/o roomates. Young people living w/ roomates can form their own household. Lower $ per square foot of housing might make having families there more affordable
One key issue is expensive cities have very inelastic housing supply. So growing demand has historically been accommodated more by rising house prices than an increase in the housing stock. This means declining demand many lead to big drops in price, but not much drop in pop.
Fewer roommates thanks to lower cost of housing may be one manifestation of this. Or perhaps just flatlining population growth or mild declines. Either way, lower housing values could be a big problem for property taxes and superstar city tax bases.
In terms of who benefits, it's not as simple as “cities lose”. For example, I could see a city like Philadelphia benefitting from this. From Philly you can remote work for employers in NY and DC, and still be able to get into the office a few times a month on Amtrak.
OTOH, u can also remote work for an employer in Philly & live in lower cost of living Lancaster, PA and go into the office a few times a month. This could actually hurt Philly suburbs more than Philly itself, which right now partly gains its value from commuter access to Philly.
Who wins on net & by how much is up in the air. Overall, I think the share of pop in lower cost of living places than today grows. And this will be good for economic efficiency, as land rents decline and housing demand can be met by new building rather than bidding up of prices.
Here is the report for more. I really hope something people take away is the issue of land rents and housing markets are very important to the remote work debate https://content-static.upwork.com/blog/uploads/sites/6/2020/07/23063848/Upwork_Report_WhenWorkGoesRemote_July2020-2.pdf
