Cities like New York and San Francisco are witnessing a residential exodus likely to affect real estate prices for decades. City residents are fleeing to more spacious suburbs and country locations in record numbers. Moreover, the coronavirus crisis has only accelerated an exodus that experts say began long before the pandemic.
Experts attending the Mansion Global Luxury Real Estate Conference in mid-October 2020 told attendees that world-class cities have been looking at significant depopulation for years. In some cities, people have been leaving in large numbers for the last decade.
One expert said that five states, including New York and Illinois, saw their largest population declines between 2010 and 2018. At least in New York, a large percentage of the decline can be attributed to residents fleeing New York City and its excessively high taxation and real estate prices.
The other side of that coin are metros like Salt Lake City, Utah. Not only is Salt Lake City not losing population, it has been steadily gaining population since the 1950s. So what’s the difference? Why the disparity?
Taxation and Opportunities
Taxes and business opportunities have consistently played a role in growth. They did before the pandemic and they will continue to do so after coronavirus is but a memory. Long before coronavirus was part of the public consciousness, people were leaving New York State to get away from taxes. They were leaving New York City to escape high property prices and rents that were not worth paying in such a congested metropolis.
Taxes are a lot more amenable in Salt Lake City. And because taxation is more reasonable, business opportunities abound. The realtors at SLC’s CityHome Collective say that local companies are hiring. New companies are moving in as well, bringing employees with them.
New Opportunities for Remote Work
Historical data clearly shows that cities and states with high taxation have seen an extended exodus of residents. So, what is it about the coronavirus pandemic that has encouraged more people to participate in that exodus? Health concerns are undoubtedly a factor among people who think it is unsafe to live in highly congested cities. But there is another reason, and it’s economic.
The pandemic has forced many companies that only dabbled in remote work to fully embrace it. And now that they have, some see no reason to go back to the traditional office model in the near future. Thus, there are more opportunities to work remotely.
Imagine working for a company that says you can continue working from home indefinitely. The only requirement is a monthly office visit. Is it worth it to remain in a congested city and pay higher housing costs now that you do not have to go into the office every day? For a lot of people, it’s not.
Even in attractive metros like Salt Lake City, where taxes are low and economic opportunities abound, there isn’t necessarily a need to live inside the city limits anymore. Workers able to work remotely might find a better quality of life 30 to 50 miles outside of town.
Some Are Leaving Their States
Some workers no longer required to go to the office are not even staying in the same state. They are leaving the Silicon Valley, for example, and heading for states like Texas and Nevada. New remote workers from Illinois and New York continue to flock to Central and South Florida.
Experts say that the city exodus we are now witnessing began long before coronavirus. They have data to prove it. The pandemic has only served to hasten what has been going on for a long time.