Small cities in America’s Mountain West are booming
economist.com
economist.com
I'm personally doing just this. I was lucky enough to land a good job out of college, buy a house in a desired area, and see it appreciate in the last 10 years. This increase plus the birth of my kids left me wondering if there wasn't a better route than continuing to need a FAANG salary to afford a larger house and private schools.
Due to this we are taking advantage of the remote work opportunities that have opened up due to the pandemic and are moving to the place we spend all our time anyway: a small town in the mountains. We get to do the things we want to do, have more space for our kids to roam, and a better quality of life without the stress of constantly needing a good performance review.
I understand this is not for everyone and I understand the negative perception of 'outsiders' pushing the price up for locals, but at the end of the day I'm optimizing for my own quality of life. I can't think of a better use of the money I've earned doing what I love than to provide a great life for my family.
You know what the end game of this looks like? It looks like Vail CO, Cape Cod MA, coastal Long Island and CT, the Hamptons, wealthy retirement areas of FL, etc. What industry is there? What opportunity is there? Well unless you want to sell your soul to the tourism industry or run some business that entertains richer people in exchange for their money (best leave your moral compass at the door if you want to succeed in those endeavors) or work in the supporting industries thereof there is exactly squat. Everyone who doesn't stand to inherit a business either gets out or gets addicted to something.
It's not unreasonably negative to not want that for ones' community or want to inflict that on some other community.
Residents of Austin, TX have been complaining that the city changed or got too crowded shortly after they moved in, whether that was a year ago or decades ago. People who moved to SF in 2010 complained about the people moving there in 2015.
Same thing happens at a neighborhood or district level too. Everybody feels like they were the last person to move in while it was still good and everything after them is unwelcome.
There is a real thing going on in the US today, a sort of inchoate rage felt at all of the poorly defined "others". My hunch is that much of it stems from the rising anxieties of climate change, economic inequality, corporate political control, and even more recently the pandemic. Everyone needs to feel they have a certain level of agency and control in the world. It's hard to sleep at night if you don't even feel certain that your bed will still be there when you wake up.
The world today often feels like we are ants surrounded by lumbering billionaire and corporate giants, hoping not to get stepped on while we watch climate change slowly dissolve the ground beneath us. People naturally cling to any remaining pieces of agency they can find, and lash out when even that tiny inch is taken from them. So when I see people screaming at a waitress for insisting they put on a mask, or sneering at someone visiting their beloved hiking trail, I wonder if it's only because there is no convenient face they can yell at for all of the larger forces that have actually marginalized them.
Twist of twists: Isn't this almost exactly what people have been saying about the Bay Area?
It's incredibly narcissistic and selfish to believe that "the locals" are only there as a hindrance to you. Would you roll up to a random village in Thailand and just start changing things, and expect the people who live there to worship and serve you?
Housing can not be both affordable and a good investment.
Given second homes are an investment, by definition having one means you're helping make homes unaffordable.
I grew up in a tourist area, and though I'm one of the ones who left for the Big City I keep in touch. I'll give you a few examples that I think are illustrative.
Immediately after college, a buddy and I shared an apartment in a nice building on a nice street. We both made decent money working in touristy restaurants, as did the three girls our age who lived next door (and, I think, the inhabitants of the other two units in the building, though we didn't have much to do with them: they were older, and had kids, so not much in common with us at the time). During the two years that we lived there, the family home directly next door sold. It was kind of sad, because a nice older couple lived there -- we watered their plants for them once, and the wife baked us an ENORMOUS batch of cookies to say thanks -- but the husband died, and the old lady moved away to live with one of her daughters somewhere else. Anyway, the house was bought by someone as a second home / investment property; during the next year it was used for exactly three days (for a really loud and obnoxious party, but whatever). We snuck in through the backyard to use the Jacuzzi a few times, but even then I can remember thinking that this place turning into an effectively vacant property was a bad sign.
Fast forward twenty-something years, and even more of the "family" homes on that street have become second home / investment properties. The four-unit apartment that we lived in is now exclusively rented out on AirBnB, displacing the service-industry families and twenty-somethings that lived there before.
Just about everyone who actually works in that town now commutes from miles and miles away, and rush-hour traffic -- on rural roads -- is terrible.
The displacement goes much further up the income scale that you'd think, too. I've kept my dentist there, partly out of sentiment: the dentist who previously owned the practice had looked after my teeth since I was, like, eight years old; my regular hygienist has been cleaning my teeth since I was about fifteen. I cleaned their office for them when I was in high school, and they still give me an "employee discount" on fluoride treatments or whatever, so going there gives me all kinds of good small-town feelings. A decade or so ago someone I went to school with partnered with the original dentist, and then bought out the practice when the old dentist retired. We've talked a few times, and I don't think it's gone quite as well as she hoped. For one thing, she has to pay her hygienists and dental assistants a premium, to keep them willing to make the fifty+ mile commutes most of them have to make, since local housing is out of reach. She expected that, though. What I think she didn't quite expect is that she'd have so many fewer patients than the practice used to have. Partly that may be churn that comes with the old dentist retiring and someone new taking over, but also it's because the year-round population has declined, and second-homers and AirBnB-ers aren't looking for dentists in their vacation town. My friend had expected to pay off the loan for the practice and then buy a home in town before her kids got to school age. It's now 8-ish years since we talked about that, and she's still making a ~70 mile commute each way.
Build more homes? Yeah: that does need to happen (I vote the straight YIMBY ticket in the city I live in, so I totally get that argument), but ... rural small-town charm drives the tourist industry around there. Build too much and you kill the goose that lays the golden egg.
It's a really multi-layered problem, that I don't think has a simple solution. That said, there are a few relatively easy things that I think would help a great deal:
1) Raise property taxes (how much? I don't know: double, triple, quintuple, octuple? What's a bigger adjective than that? It should be by whatever multiple it takes) on any property that's not a primary residence for someone. At some level it becomes worth it to rent out your investment or AirBnB property to someone who'll actually live in it.
2) Restore the train line into town (and probably electrify it, too), then run regular commuter trains throughout the day. The right-of-way still exists, and is currently used for touristy sight-seeing and dining trains. Those can still run, but they're terribly inefficient as the only users of the rails. The goal should be to get workers cheaply to work, and tourists off the roads.
3) Charge a congestion fee to anyone who still chooses to drive. I'd make it $300 for a permit that's good for a year: that hits the tourists really hard (and helps subsidize the train), but should be relatively affordable for anyone who works or lives in town.
I dunno. I'm not really arguing with you, but I do want to make the point that the economics of tourist towns are weird, and at least some of the locals' resentment is driven less by entitlement than by economic forces, and enforced changes, that really are hurting them.
Unfortunately, "I was here first" sounds a lot like "fuck you, I got mine". And it's not gonna fly.
Wealthy people moving to low-cost areas (and thus raising cost of living) accelerates inequality for a few reasons.
1) Unlike you scenario, many working-class people in places like Sedona can only afford to rent their homes (25% of total, give or take in Sedona). These people incur huge monetary costs in being forced to move / switch jobs / etc.
2) Moving causes people to lose social capital. Laugh all you want, but going from a tight-knit neighborhood of peers to a new town of strangers creates costs, at least in the short term. No one to watch your kids, no one to give you a ride if your car breaks down, etc.
3) Even for those who stay, they lose power, since their new wealthy residents likely have better lobbying sway (e.g., the new bus to the airport causes service to decrease to job centers, etc.)
I don't disagree that certain locals benefit from gentrification (parent comment made the same point), but your capitalism-enabled lack of empathy for those who don't benefit is why people are warming to the ideas of socialism. So if you don't want that, I'd tread carefully & try to be a bit more empathetic.
Urban poor or rural poor, techies/finance/etc displace them all the same.
The missing link here is, IMO, community involvement. Don’t become a ghost resident jacking up rents. Do join a community board, PTA, etc. Become an active stakeholder and learn about and contribute to wherever you live.
Locals, urban or rural, aren’t pissed only about rising rents or home prices, but also millennial wealth moving in and not giving a f about what’s already there.
Empathy and demonstrating community interest towards the locals goes so far but that seems so low on the problem population’s radar as an easy solution.
I was born in the US to Asian Indian parents. We lived in a small town in the southern US and dealt with a lot of racist crap. I went to college in a big city and while racism still exists the majority do not have racist views and are more accepting of people that do not look like them.
I've travelled to 47 states and I am most scared when I am in a small town in the mountain west. Burns, Oregon. Moscow, Idaho. Everyone was staring at me in the grocery store. I got some intimidating comments like "Are you new in town?" "No, just passing through." "Good."
Not welcoming in the slightest.
Replacement of whatever (necessarily small, otherwise the big city money wouldn't be a problem) industry there is/was with entertainment and tourism isn't the issue. The reality of an economy that is dependent on a specific image or perception (many would say facade) of quaintness is the problem.
You get all sorts of terrible "crab-bucket-esque" feedback loops that quash people's desire to do anything different, innovative or ambitious for fear of harming the golden goose. A large fraction of the people who actually want to do things (boring old normal business endavours that underpin a sustainable economy) leave because whatever their trade is doing it elsewhere and not putting up with all the extra overhead crap of doing it in a tourism/entertainment economy. The fact that a much larg(er than in a "normal economy) portion of the customers any given business sees will only ever transact with them ones creates a bunch of perverse incentives to do dishonest business.
It's like everything that's wrong with a college town combined with everything that's wrong with a wealthy retirement community.
Edit: strike CT from that list of examples, I was going for a "Cape cod but in the NYC economic region" and that part of CT is more like NYC's wealthy NJ suburbs.
COVID and the resulting remote work might actually be contributing to a better distribution of wealth in the country in general. It might depress salaries for industries that have concentrated in places like SFV and NYC, and thus create incentives to move out of those areas and create less drastic occupational concentrations in some industries. These changes will create conditions that create secondary benefits.
I want to say no because I feel like I can improve my QoL in ways that don't harm others, but all these examples are telling me that its really that I don't (or maybe even choose not to) see the negative consequences until its compounded by a large enough group and it ends up being another one of your examples.
The best example is land & desirable real estate. It only takes a few people with "outside" money to drive up prices in the market or to purchase land and sit on it in perpetuity, driving up prices by taking it out of the local supply.
This doesn't happen because those same locals that are homeowners love the value of their house exploding upwards
For the most obvious - Once you're off a municipal water supply (which of course, has to have an adequate source of water in the region), available water resources/aquifers are often very limited and minimum lot sizes have to be large because the land can't support higher density housing.
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If you build anything even approaching "normal" suburban SFH housing, you're just going to have all the wells you'll have to sink run dry in a few months and the properties will be uninhabitable. Seeing a 2 acre minimum lot size isn't necessarily a "keep the poor people out" thing.
To be clear, I am mostly not referring to the cities mentioned in this article, but housing development in smaller mountain towns and the rural/semi-rural areas up in the mountains.
mmmkay
Complete zoning and policy failure is a uniquely California problem. Nobody has a structural, and likely unconstitutional inequity in taxation that California does. Some rando Bay Area suburb being more expensive than Manhattan is not the same problem.
If this is happening to your town, the town has a choice: The newcomers are coming. Are they going to live alongside the long term locals, or are they going to replace them? Are the locals going to get rich and leave, or are they going to remain poor and stay? "Get rich and stay" is not an option.
They are not obliged give any piece of their land to the people who want to live there. It's in their interest to fight to preserve local communities and local businesses, putting obstacles to the "nomads" and corporations.
If we'd been better about crack/cocaine, opioids wouldn't have hit so hard. If UI benefits weren't designed to be difficult to acquire, the ongoing problems states are having distributing them in this crisis wouldn't have happened. Right now, people living in small towns that are being effected by an influx of monied transplants have a roadmap of how this process works. If they so wish, they can disrupt it, and insist that, as new wealth pours into their area, a substantial portion of it is put towards improving the area for current residents, and towards securing their socioeconomic right to remain there. Sometimes that means telling rich people no and foregoing a short-term pretty penny, and being ready when they come after you for denying them. But that's much easier than watching your community disperse to parts unknown while yuppies live it up in your childhood home-cum-gutted minimalist smart bohemabode.
Will they heed the warning?
I used to vacation there.
As one of those clueless people who can't buy marijuana in a legal state, I am equally clueless on the signs of terrible addiction if I drove through Cape Cod, MA today.
I'm not sure what makes me more sad -- the existence, or my incapability to notice the existence.
You can increase your "street-smarts" by getting out of your comfort zone, by choice or circumstances, and with life experiences. I locale and talk to the saner homeless people, especially the older who are just there by personal circumstances: I met a former teacher and elevator repairman who makes money today as a tutor; a former hippie, Navy radar and aircraft electronics technician, and Apple II rework technician; and a law school dropout, former hippie, merchant marine, and writer for the Village Voice and the NY Daily News.
* influx of tourism and remote owners -> rising prices
* lack of tourism or property interest -> slow death
I am not sure what would be the right public policy to balance the two extremes.
Maybe Hawaii has the right idea with tiered property taxation - the longer you reside there, the lower your property tax becomes?
For example, Local NIMBYist restrictions, mostly those individuals that have resided there for a long time (and have the lower property tax rate you describe), have resulted in areas immediately adjacent to 40-story downtown developments being zoned exclusively for single-family homes; see Kaimuki, Upper Tantalus, Manoa, Punchbowl (to an extent), etc. Consequently, even homes built over 80 yrs ago with only ~1,300 sqft sell for about $1.1 million; https://www.zillow.com/homedetails/1001-Belser-St-Honolulu-H....
The majority of people employed in hospitality and trades that support the local tourist economy (electricians, masons, carpenters, etc.) are increasingly driven to the west side; where commutes to the city can easily be 1-2 hours normally (pre-COVID). This eventually becomes such a stressor that many of the people working these skilled trades leave for the mainland.
This is HN, the owner of the brewery probably cashed his stocks a few years earlier and saw the opportunity.
A lot of folks on this website are entrepreneurs and are completely detached from the folks that don't want an influx of money in their town.
Regardless, the geographical narrative is not quite the same. Silver City or Prescott Valley aren't going to run out of space like an alpine creek junction or barrier island/moraine. Water is a different story.
The question is ultimately whether newcomers will participate in the town's development or in its decline, via interactions with the local community, politics, schools et cetera. Just because we built segregated communities over the last century doesn't mean we have to do it for the next one.
I'm old enough that I remember my home town (which has been inundated by California retirees) as having 100% family-owned grocery stores, drug/general/hardware stores, distributorships, all of which started shifting heavily to chain and corporate dominance by sometime in the late 1970's. Since the modern concept of retiree and tourism based economies hadn't taken hold, towns of that type had to be mostly independent in terms of income for money inflow....small factories, mining, farming and ranching, etc.
I'd say that this movement of people who can afford it just another side effect of something bigger. The irony that a lifestyle of living in a nicer small town with a Powerwall and a Model 3 is both less sustainable and less diverse is not lost on me.
> I'd say that this movement of people who can afford it just another side effect of something bigger.
It sort of sounds like you answer your own question (/hypothesis): consolidation of industry. Which also seems to be a pretty big driver in wealth inequality. I've no idea what the correct response is here -- greater regulation to increase competition, so that there are more smaller players across any given industry? Who knows.
I'm sorry, is that supposed to be an excuse? I mean, on the whole, some displacement of locals isn't that big a tragedy, but "it was good for me, so fuck you" isn't exactly the best moral reasoning I've ever heard.
If its ok for a young person to leave their hometown, move to a city and call it home to make a better life without thinking about the locals, then it must be ok for a person with a small family living in a city to move to a smaller town and call it home to make a better life for his/her family.
The reason that theses two scenarios are not equivalent is so obvious I'm wondering whether or not I'm misinterpreting it.
[Edit: Having parented teenagers I suspect the awfulness of the 12 to 14 age was probably more about me than anything else!]
Such is the mind of a teenager.
For work ( before covid), it wasn't interesting, definitely not tech related stuff. I'll return when I'm older and have the time to maintain a garden.
I think the bound between people in smaller villages of better too. You're limited to what you have, so you accept persons more to do they are.
In cities, you tend to like up people similar to your interests. And there's more possibility that an interest changes or you don't meet at the same event anymore.
Edit: The Indicator recently had an interesting podcast that demonstrates this effect.[1]
https://www.npr.org/2021/03/15/977533022/please-sell-me-a-ho...
All well and good, but the economic and environmental effects of everyone "optimizing for their own quality of life" without regard for others means everyone loses out, don't they?
This is the crux of the matter. There is a lot of demand for less humid, mountainous regions with lots of outdoor recreation nearby. And it’s easier than ever to scope (due to internet) out the nice locations from wherever you are in the world.
So people are taking advantage (or already have) of an arbitrage opportunity to go where they want to that they previously may not have known about, or been able to go. The population of the world also exploded in the last few decades.
There's no shortage of small towns in the US. If I threw a dart at a map of the US, I'd probably hit near one. (OK, a lot of the West is federal land but there are a lot of them.) There are a lot fewer that:
- Are in a climate you prefer
- Have recreational options you like
- Are perhaps gentrified to the degree they have food/cultural options you want
- Are perhaps at least reasonably accessible to major city/airport
- Aren't too susceptible to natural disasters
- etc.
Practically, probably not. Few people talk about that, most dont.
Most will move for affordable, but wont necessary like abrupt change from FAANG and big city to small city and not much to do. They will need to adjust to different culture, new hobbies, find new friends, everything.
And that is not even speaking about those whose partners dont want to move, whose partners have jobs, friends and social networks they like/need. And that is not even speaking about the "what with kids does this makes sense to them" topic.
Versus in the city I live in now, there are almost a dozen public courses in a reasonable drive. Dozens of car dealerships. Dozens of hiking trails. Dozens of beaches. Dozens and dozens of everything. I can vet options. I can do the same activity in different settings easily. If I am in one area of town, I have flexibility to find options in that area rather than going with my usual option close to me. I have choice. I have agency. I can take my business elsewhere if I need to, and come out better from it thanks to this huge population being able to support a variety of choices for any niche interest I might have.
And of course in the old days the argument was you could just make do with online shopping. But these days the signal to noise ratio on the internet is so pathetically low, I really value actually holding an object I buy in my hand before I get fleeced buying something online once again. Reviews can't be trusted. Images can't be trusted. I trust my eyes and my hands and if the price is fair, taking it home with me is the best deal on shipping there is. Being in a huge city means there are a lot of brick and mortar businesses. Businesses that probably closed years ago with the death of main streets in smaller cities and towns, but thrive here thanks to a huge population being able to sustain more businesses in a given area, even if many people opt to online shop.
Say you liked boardgames with friends. The new city have different people, the play different games, you dont like either new games or new people. Say you liked swimming and the swimming pools in new city are too full or otherwise dont suit you. You liked going to local beginner art/dance club, but new place dont have equivalent.
Moving to different place, especially when the environment changes comes with changes in lifestyle you may or may not welcome.
No doubt plenty decide to stay but for many it was always a temporary move.
It's unfortunate that you phrase that as egoistic because I think that apart from real estate price (which is highly location dependent because it depends on zoning laws) locals are better with the influx of money. In my experience in France, some rural places with low real estate tension are very happy to see urban people coming, but in other (like small coastal cities) there is a huge resentment because real estate skyrocket in a relatively short time.
Have you considered that this is the mentality that people take issue with? It's the root of many of today's ills.
You have a responsibility to society (the same society that put you in the position you are in, able to move/work remotely and pay you these exorbitant sums) to not ruin your community. If you moving to a place would cause the community in that place to suffer, it is your responsibility to not move there.
The fact that SV/tech has forgotten any sense of personal responsibility and apparently thinks it is perfectly okay to trample on the lives of others is exactly why non-tech people have such disdain for FAANG workers.
This kind of self-centered thinking, at scale, is what lowers the baseline quality of life for everyone.
The irony is that most educated people living in small towns want to get out, and a generation or two after they do they want to go back. Will the cycle repeat itself?
But it won't "all else equal", there are so many variables at play here that it's meaningless to talk about a hypothetical "all else equal" scenario. Also there have been so many successful people who were born and raised in what you'd call "less competitive" areas.
>The irony is that most educated people living in small towns want to get out, and a generation or two after they do they want to go back.
What's ironic about people going to places chasing things they desire? Big cities and small towns offer different things, and those things value differently to different people. The people who are leaving small towns chasing after opportunities and the people who want to move back to small towns from big cities are obviously at different stages in their lives and value different things.
>Will the cycle repeat itself?
Probably? But why is that an issue?
That’s absolute horse shit.
And whilst I don’t have any evidence to sprout, I think that those from more diverse and unusual backgrounds are better adapted for modern life. Growing up in a ‘competitive’ city is a licence for blandness (opinions mine)
In SV, the pressure on kids and parents seems extreme even at the median. While there are less opportunities and resources overall in a small metro, it’s all available to an ambitious child.
In the end, at least some small town kids are out-sprinting the “competitive city” kids and taking their loot back home. Otherwise we wouldn’t have all these articles about it.
But tech transplants by and large should not be considered typical residents.
What you say definitely does have elements of truth to it, but I’d wager the effects of parenting and income are, on average, much larger than your direct setting when it comes to succeeding beyond the median of their peer group.
Doesn't seem like you know much about small towns. I grew up in one. The educated people are there because they want to be. That's sort of by definition, and follows from the fact that they're educated -- they have been somewhere else (you don't get "educated" in a small town, not in the way you mean), and they chose to go there.
The ones who want to leave are the uneducated ones, who would love to have an opportunity to get "educated" in that sense.
Your kids all else equal will be outsprinted by kids who live in more competitive cities
Not everyone wants to be part of this rat race you're talking about, nor do they want their children to be. Having ended up at FAANG (despite my small town upbringing), I talk with a lot of young people (interns, new hires) who are products of this rat race. By and large my impression is that:
1. They haven't lived much. They haven't done many things. They've been too busy in their competitive classes in competitive schools trying to get into competitive schools.
2. They don't seem very happy. They tend to be high strung. Nervous seeming. Scared of failure.
that decision will ripple through to future generations, e.g. your grandkids will be less educated.
How would you even know this? How do you know parental education status isn't the real factor?
Desirable towns popular with outdoor recreation enthusiasts are generally not suffering any sort of widespread brain drain issue (if anything, they have the opposite issue - too many highly educated people, not enough of the people to do the jobs lower on the ladder).
They have about nothing in common with some rural town in the Great Plains that's been slowly depopulating for a century.
Midway, for instance, a town on the Wasatch back situated in a location that feels similar to Switzerland, has gone from about 150 diaries to 2, as expanding housing developments buy out the high-valued farmland.
You'd think with the influx of money, and reduction in competition, it'd be easier for the remaining diaries to compete. Not so: the price of milk has remained basically unchanged since the 70s, but the cost required to run a farm has kept increasing.
So why not cash out? (A few farmers in the area have actually cashed out and moved to Idaho, and they're pretty much set for life.) Long story short, Midway is a beautiful place to live, and the remaining diaries form a pillar of the community - it's just not something the remaining diary owners, who have been farming the land for generations, want to do.
To stay in business, the remaining diaries have pivoted to artisan cheese production, with plans to produce other high-valued products, like ice-cream. Tours and locally-sourced farm stores are an additional source of income.
Of course, these are just my own two cents. I don't mean to come off overly negative about the situation. As much as I'd love to work for a FAANG, retire early, and buy a large house in an idyllic mountain town, I'd hate for that same town to loose its historical roots and what makes it that special idyllic mountain town in the first place.
Source: I'm a software engineer who lived/worked as a cheese-maker for a dairy there.
It's already arguably happened; fruit orchards and irrigation turns were big part of the milieu in Orem/Provo a few decades back, and they're all but absent now, and in general the Wasatch Front has taken a dramatic turn away from agriculture in the last 30 years.
It's easy to imagine the metro areas like the Bay and Los Angeles like they've always been that way, especially if you're younger than the internet. But if you look at early/mid-century maps or pictures you realize that there was still a great deal of open space and agriculture mixed in. It doesn't take a genius to realize similar changes are coming along regions like the I-15 corridor.
California problems follow California popularity.
Using fat paychecks to lay waste to small towns is one of the few things tech yuppie and oil pipeline workers have in common.
Best (i.e. least worst) case scenario you end up as a rich people playground like Tahoe or Cape Cod where everyone without a conscience runs a business skimming easy money off the wealthy (or becomes a plumber and does it with an extra abstraction), everyone with ambition leaves and everyone else winds up with a substance abuse problem. Worst case the money leaves for good and you wind up like coal country.
E: forgot the link https://www.growingproduce.com/fruits/the-last-of-his-kind-f...
Though, really, not even that helps because towns can't actually (or really want to in general) arbitrarily prevent outsiders from moving in. So a desirable location just ends up with a different group of people with the money to purchase existing housing.
That said, I can't help but wonder if it is possible to shape how people buy. For example, with the existing very limited housing stock being exacerbated with large capital chasing it, I'm inclined to think that there should be property taxes that are a function of housing one already owns in a given market and supply on the market. So... want to buy a new house and keep your old one to rent out? Want to buy a third in a market where there isn't two weeks of supply on the market? Maybe you'll pay a bit more, both on the transactions and yearly. Want to buy your twelfth or twentieth unit as part of a fund or trust in a market where there isn't a week of supply on the market? Maybe you're going to get hit hard, and you should try to find some other productive use for your capital.
Apologies if this sounds exasperated, it’s a genuine question:
How is this a California thing?
Money flows out of cities. That’s globally true. Is this not happening everywhere on the planet?
California happens to have two massive cities, so it’s a major example of the phenomenon. But what is specific about California here, other than the random fact that California’s specific top industry happens to be the global top industry at the moment? As New York was in the 1980s, Detroit in the 1950s, etc.
In some places it's grass to baskets to warehousing to shipping. In others it's grass to sheep to wool to textiles to fashion. Still others it's trees to lumber to paper to stationary.
Other industries have their own moves.
In areas that can't manage this move up tend to see the local industries consolidate until some final monster exists and either also eventually fails too (to external competition) or rent seeks its way to a zombified existence.
There's other alternatives to when vertical value growth isn't possible -- like in developing countries, the businesses all coexist together, but tend to price each other into nearly unsupportable levels. Strong regulations tend to kill this alternative off leaving an up or out path one of the few viable ones available.
Two reasons:
(What used to be called) Yuppies moving out here and working remotely to 'get more in touch with nature' (read: start a blog or something about sustainable living that is really only possible if one of you has a 100k+ salary) and investors from out of the area are purchasing land as an investment. Both of these things drive the cost WAY out of the range of what is (a) reasonable, or (b) attainable.
I'm over the whole thing. In an area where the median family income is around 55k/year, anyone that makes double that as a single individual can live like a king. Consequence: none of us that live here can afford the increase in taxes, home values, or property values anymore.
This is why housing prices in the Bay are so stupid. People don’t want it to lose it’s magic and their solution is to freeze practically all building. As a result, even the people there are forced out due to growing rents, increasing housing prices force kids to leave, commercial rents replace tattoo shops with skin spas.
And you lose the magic anyways.
Though with modern shipping taking milk from the middle of nowhere makes sense.
More recently, some local farmers worked with local government and businesses to figure how to conserve farm land. New laws and capital. Pairing immigrant farmers with land. (Here's the first hit from a quick search, not authorative, just to get the gist. https://crosscut.com/focus/2020/02/how-immigrant-farmer-kent...)
These efforts to conserve -- farms, wet lands, open spaces -- make me so proud.
At the same time, I'm pro development. Done smart. Such a huge opportunity.
I'm completely on board with Matt Yglessia's One Billion Americans (1B4USA) thesis. For so many reasons. Mostly as a way to reinvest and revitalize the entirety of our country. Back to Main Street. Back to family farms. Back to localized economies.
Please explain what "premium" milk is. Milk is a commodity. All milk has a code on the bottle that indicates which farm produced it. If you compare codes you'll often find the cheaper store brands are the same thing as the more expensive brands.
In New England Organic Valley is as good as it gets for store milk,
The dairy I worked at does sell high quality local raw milk; they have a pasteurizer to produce cheese, but they can't use the same one to produce pasteurized milk.
Additionally, the cows usually produce an excess volume of milk, which is sold so it doesn't go to waste: it's important to remember that even if the milk is sold for, say, $6 at Whole Foods, not all of the markup goes to the farmer.
One reason for my success in being happy here is that I accept the 1 1/2 million tourists who flood through our town every year. I view them as good for our economy and go out of my way to offer advice on the hiking trails to people who are obviously visitors, easy to do since I like talking with people. A few of my friends are miserable because of the tourists, but they are just a fact of life.
"Beautiful, scenic place; solitude; easy access to population centers" - pick two. There's a popular Wilderness Area about a 30 minute drive from Bend, Oregon and people act all surprised that there are lots of people there. You're not going to get solitude in a place like that. You need to accept that others want to be there too, and deal with it. And maybe do some volunteering to maintain the trails / educate people about proper wilderness etiquette.
I lived in tourist heavy cities (London, Paris, Miami, NYC) and loved chatting with them. And some of them get you to be a tourist in your own city. It took me years before I finally visited the Eiffel Tower. It was always in my periphery and I blended it into the background. Then someone personally invited me to come along.
What!? Capital One has a deep learning team? As a long-time customer of theirs, I can't even begin to guess what that team might do for their set of products, except maybe to optimize their credit card offerings.
Looks like a very interesting field to work as an applied ML/DL researcher (explainability, white-box vs black-box, bias, etc)
If you believe that the climate crisis is a problem and a big one, then you could be for a rude awakening as most experts now consider the collapse in biodiversity to have far bigger impacts on human lives and living conditions than climate change[0].
The only reason why there are fewer headlines about that on on climate change is that the IPBES was founded decades after the IPCC.
I'm afraid that many will finally take a few steps to reduce their carbon footprint and use this to justify expanding their footprint on ecosystems ("clean" but larger houses, "organic" but wider lawn areas, "clean" but more frequent transportation that break natural habitats, etc).
[0] https://en.wikipedia.org/wiki/Global_Assessment_Report_on_Bi...
However, this looks like an area where environmentalists risk getting themselves into trouble. Global warming is a defined and solvable task, but the messaging keeps changing to something more like an open-ended commitment. That has huge risks for the public to tune it out, and perhaps further procrastinate on the carbon emissions problem. Average people do not have the emotional energy for a perpetual guilt machine.
> We must increase the density of our cities.
I kind of don't feel like we can afford to. The housing price increases since 2020 have an atrocious human cost. These rising costs of living are not sustainable. There are some good (tech) jobs that compensate sufficiently for this type of development to work... but no where near enough. On a macroeconomics sense, I'm inclined to think it just doesn't work at all.
I'm also skeptical that the arguments apply to THIS migration. People are not moving into the rain forest, and the American mountain west, in particular, is fairly arid. The wildlife density of some places is orders of magnitude greater than other places.
Preservation is a battle that you never win, you just delay. If we can't have our big houses, wide lawns, and transportation work with some ecosystems, maybe it's all doomed either way.
We need to build our cities like we did pre-wwII. We need cities like look like Tokyo, Vienna, Paris, Manhattan, etc. We need cities that are dense and walke-able. Whether that is through removing zoning and height limits and putting parking maximums, or through government building public housing. Something needs to be done, it is a threat to our existence.
We need to densify cities and towns, and replace highways full of SUVs with train lines. We need to replace coal and natural gas burning with solar, wind, hydro, and nuclear.
The costs are rising because there is demand to move to cities, but we aren't increasing density. In most cities zoning and arduous permit processes are making building downright impossible. The lack of real density is driving the cost problem
We could also try to make a few new cities, instead of ten thousand new suburbs
I recommend the book Order Without Design: How Markets Shape Cities or the short podcast of the same name.
If you care about ecological collapse, you should be worried about intensive agricultural practices and agriculture in general. I think one should always be wary with topics like climate change or ecology that issues may exist at many orders of magnitude and it is important to focus on the bigger issues. (Yes there are very small areas to which some species are endemic but general hand waving about density is not sufficient for them: a farm is not dense)
I agree. And moving from California to somewhere that still builds new housing is one way to contribute to that.
Sure, you miss out on the cool things the city offers; but a couple hours drive and you're in a big city. I found the need to go only about once a month; the rest of my time was just too happy in nature to feel much need for what the city offered.
If you haven't tried mountain life - and I mean mountain life, not big city near mountains - you should. Rent a condo for the summer and temporarily relocate there. Chances are, you'll decide you don't want to leave when the summer is over.
If you get outside the house, then you can find interesting things to do anywhere. In the city that means a different experience than in the mountains, which is different from lake country, which is different from the plains; but there is always something.
This must be why "ban cars!" is so prominent on HN. Apparently people here have a hard time imagining a location where they can provide quality-of-life improving utility.
But to my own example. I live an hour drive out from a major city so, in normal times, within fairly easy range of going in for a night of theater or whatever. But between myself and a couple of neighbors where I live, while not really rural, we're on about 100 acres between us.
Giving up cars usually means getting good public transport. That's a trade I happily made.
My family is squarely in this situation - bought our home a few years ago in an extremely fast - growing area, and watched prices climb to levels that we didn’t believe at first. Imagine purchasing a home in 2019 for $500k and selling it today for $1.2M. That’s the reality in some of these cities.
People don't learn.
-- "When Money Dies"
I can't help but think that it is unsustainable though. Supporting a large, rural population is less efficient than urbs or even suburbs.
Global warming, increasing global competition... I can't help but think the people fleeing the cities will be forced back by incentives and economics in a decade.
Whenever I see statement like this, it makes me wonder if you know where your food comes from. Because for the most part, the rural populations are supporting the cities. If the supply chains in this country were to fail, it is not the rural communities who would be scrounging for food and water. We'd be just fine.
To avoid arguing semantics, supporting a large population in low-density is less efficient than in high-density.
Yet while there is climate change we're seeing urban sprawl of low-density communities continue.
Meanwhile, they're pushing out the original farmers due to price increases, more than anything, the food argument doesn't hold up.
By the way, plenty of suburbia is just as bad or much worse than similarly low-density rural areas. Living spaces should aspire to be walkable, that requires some level of density.
Mostly from machines and chemical inputs made by people who live in cities, used by people who can barely make ends meet in rural areas.
Looking back, personally I don’t regret my choice. The direction remote work is taking us in is one where there is more pressure coming from high earners in what used to be low cost markets.
Right now, this is painful if you live in one of these places. What could have been the first homes for a lot of folks living in these areas are second/weekend homes of folks who live in major cities within driving distance. It pains me to say this, but I think putting the time into a high-earning career up front has left me in a better position to live the life I want to live in one of those towns vs. my friends who have been there all along and are starting to struggle.
On the flip side, a shift toward remote work will hopefully open the playing field somewhat for them to find their way into higher earning roles. The unfortunate side effect is that there’s more pressure to embrace the change and get into the rat race for the highest possible income you can find.
I can't say for sure whether this boom has been good or bad on the whole, but I can say there are lots of people like myself who are excluded and are left wondering where we went wrong or what we could have done differently.
It's a particular kind of boom. A lot of out-of-state money and migrants have poured in to buy houses in places with fewer COVID restrictions and lower prices.
That is fundamentally changing the character and politics of those cities.
People are buying houses after nothing more than a Zoom tour. The car dealerships have run out of four-wheel drives (even though the winter was dry). Traffic is up.
A couple of those states have turned more blue, and a couple have turned more red. It might all be a symptom of the Big Sort.
Construction materials have increased in price by several times, and building improbably continues, especially in places like Bozeman (mentioned in the piece).
In some Mountain states, a lot of people never took masks seriously. You could say that people are moving down the COVID policy gradient.
EDIT: I was born in a small western town and find myself missing certain aspects living in a larger city working in Tech.
There was a lovely older couple who were running the tourism center and provided a bunch of great information. The person in front of me repeatedly interrupted this nice old woman and talked over her, after she got the info she needed she got into a 4 runner with California plates.
The surrounding OHV and hiking trails are phenomenal but the town is going to be very boring once the locals are forced out.
What kinds of experiments? Depending on that answer you may want to investigate States, Counties, and Cities by their regulatory regimes vis a vis what you want to do. Make a short list of likely places and go visit them. Get a feel for these places. Does the altitude suit you? Humidity or lack thereof cause you any issues? What is the fire danger, or risk of other natural disasters? Are there sufficient ways close by to supply your lifestyle? What are the school choices if you have kids? Are there enough pursuits in the area to sufficiently entertain you? Can you adequately practice your religion in these places or withstand those that do? Are there good places to make friends? Finally, how easy will it be to recover from a mistake moving there? Answer these kinds of questions and you’ll know better what you’re getting into and you’ll know whether you really want what you think you want and you’ll know where to go.
What most find is ideally and if you can afford it is two homes. A secluded home and a city home (or beach, etc... whatever you like)
I agree with your general advice. Also just think about what you're looking for. E.g. there are tradeoffs between more resort-y areas and places more off the beaten track.
I think a good bet is to find an heirloom house and property and bid on it.
I think with things like starlink and solar/batteries this will only continue to more remote areas. Before water/server were the well covered utilities. Now with internet/power we can cost effectively move further afield while staying connected and sacrificing less modern convenience better than ever.
Houses in this neighborhood are now selling within 24 hours at typically 5-15% over asking, which is not typical at all for Cincinnati. This area isn't as depressed as some areas of the so-called "rust belt" but it hasn't been a "hot" real estate market for some time. The demand is being driven largely by people moving here from much higher priced areas of the country.
Lately investors have started entering the market here, plopping down cash for houses sight unseen at 10% over asking in "up and coming" neighborhoods. That's something this city has almost never seen except for maybe around downtown and the university.
It's good for local homeowners to a point, but people are already talking about how this could ruin neighborhoods and drive up rents.
My realtor joked with us that "we don't count" as carpetbaggers because we grew up here.
If you have kids stay close to a larger city. Your kids will have more opportunity.
For anyone else looking. We took a two month road trip during the worst time of year (climate wise) and took a road trip to see where liked it best. We chose North Carolina and love it.
Back when I was a childless introvert, living on a 15 acre ranch by myself would have been living hell, and would no doubt have done terrible things to my mental health. I might not like being social, but I still went out to concerts, movies, restaurants and similar (often by myself) and doing so was always mentally invigorating. Plus going to the pub with that one friend I did have was very necessary for my mental health. Being an introvert doesn't mean you don't want to be around civilization. As a childless introvert having a small apartment in the middle of town where I could walk everywhere was the obvious no brainier, and worth every penny.
As someone who lived in Manhattan, I used to believe this.
Then the pandemic happened, and I watched how our so-called "civilization" handled it. I could not really imagine a worse outcome: it was mismanaged and terrible from the highest levels of authority down to the most insignificant end-user.
Now this introvert very much wants the option of being not around civilization at times. I don't trust civilization to remain civilized, in even a minor pinch.
I will likely build a house 100km from anything, and spend 25-50% of each year there.
This makes me roll me eyes a bit. The Economist is generally pretty YIMBY, but this sounds like the "character of the neighborhood" nonsense I hear from local wealthy people who are doing their damndest to pull up the drawbridge behind them.
* There is so much space in the American west.
* Quality of life depends on a lot of things. The 'quiet mountain town' where I live in Oregon has benefited greatly from having some more things going on locally. There's even a fantastic Italian restaurant run by a guy from Tuscany. You wouldn't get that in a true small town of which there are still so very many all over the west. For every 'hot' market like Bend, there are various depressed former resource towns like Burns or Lakeview.
* Proximity to wilderness basically means being near public lands like BLM and Forest Service. Those are generally pretty hard boundaries: just because your city is growing doesn't mean the Forest Service will cede land to it.
When the pandemic is over and WFH policies are tightened, I'm sure some people will migrate back after they discover how horrid it is to commute for hours a day. But I sense that WFH is the new normal and so this transformation is likely long term.
Is that true, or overblown?
The traffic jams on weekends are real, but avoidable if you know when and where to go. There are plenty of things to do that will avoid the crowds people complain about. It's not that hard, but the popular stuff everyone knows about are always packed.
Cultural homogenization is really dependent on who you talk to and who they hang out with. I have tons of friends that complain about this here, but from what I observe they don't try to hang out with people that are much different than them. There is diversity here (could be improved for sure), but you need to make an effort to seek it out.
I think from a surface level glance those things are true, but if you want to get more out of what the area has to offer and avoid the pitfalls, it's not that hard although takes some effort.
All the OutdoorsBro(tm) that I know are moving to Denver, so idk if I would even like it.
A lot of people are looking to move into mountain communities that are largely water stressed already. Adding more people, with less water, and higher fire danger and it’s going to get ugly.
https://fred.stlouisfed.org/series/SFXRSA#0
I'm unconvinced this spells the beginning of a long term trend re: remote work. It's more a sign house prices are going up everywhere. Remote workforce will grow from this no doubt but the smart money remains on work looking very similar to how it looked pre pandemic IMO.
Between the framing studs would be insulation, and on the inside of that goes drywall.
Has nothing to do with rural towns. There are plenty of rural towns in the Midwest that are still cheap, I grew up there.
I find it very educational to read what people have to say about living in the various parts of the country.
My wife, son and I lived in the Midwest where I worked in tech from the mid 1990s until 2009, when we moved to the SF Bay Area. While we could technically afford to buy a small place in California at the time, the difficulty we experienced selling our home and land in Missouri soured us on buying, so we rented in Mountain View until 2020.
In our early 50s, and rent for a descent 1000 ft^2 two bedroom apartment approaching $4800/month, and the pandemic raging, I transitioned to a full time remote position and we bought an enormous property about 10 miles outside of Olympia, Washington. Our total cost of living, including food, rent/mortgage, utilities went down by not quite 50%, but I was still getting paid "Silicon Valley" rates and benefits, and I still am....and I will likely continue to be.
My wife's various businesses have long been fully online, and her income has gone up tremendously during the pandemic, with no sign of that changing.
One thing that facilitated this move for us was our son attending High School from home via https://cava.k12.com/ in California, and we were able to transition to the Washington State version of k12.com for his senior year, which is finishing up shortly.
To the article at hand: while we don't have any solid data, anecdotally we understand that there's a skyrocketing housing crunch in the making in and around https://en.wikipedia.org/wiki/Olympia,_Washington and our property has appreciated about 17% in less than a year.
More to the point, from the perspective of our read on NextDoor (which so far has been a LOT more healthy than the NextDoor in and around Mountain View), https://old.reddit.com/r/olympia (and /r/seattle) and various personal conversations, there is a huge influx of 'money', and the long-time folks are pretty unhappy about it. My wife and I are pretty chill and we get along with people, so it hasn't been directed at us.
Yes, we definitely feel bad that we've done a small part to negatively impact the life of our new neighbors. Our plan is that this is our 'forever home'...I don't know if that 'offsets' things or not, but we're certainly not looking for a quick flip.
I don't know where/how this ends, but in my high level estimation, there's far more possibility of building new housing in Olympia + Colorado Springs + many other places than there is in just the SF Bay Area.
However, that local, who isn’t making California money, that is working a local job and making local money and is hoping to move up in housing for their family is priced out because housing pricing has doubled or even tripled.
People that wanted to retire to rural or remote areas where pricing is traditionally cheaper are now fucked over.
Sure, the owner didn’t need to price their home higher. Sure, whatever the market will bear. It still doesn’t mean it sucks less for the couple with a baby on the way hoping to buy a home in their home town that is now double and triple the cost.
No, I haven’t been personally affected by this. I’m just worried what is happening and will happen around the US in the coming years.
135,000 more people left California than moved in last year. Even if they overwhelmingly moved to only ten other states, that’s just 13,500 extra ex-Californians in each one of those unlucky states. And not all of them are going to be wealthy, surely some non-negligible portion will be less well off. Maybe they’ll be wealthier on average, but it’s not 100% tech millionaires.
Somehow this is supposed to be responsible for skyrocketing prices in Austin, Portland, Atlanta, Denver, Boulder, Seattle, Aspen, Jackson, Tahoe, and hundreds of other cities, towns, and locales across the country. All the while the price of housing in California suburbs is going up too!
At the same time, interest rates are plummeting. For a given house sale price, this can dramatically affect the affordability of monthly payments: refinancing last year from 4.325% to 3.375% cut my payment by a full 20%. Sub-3% loans aren’t too hard to find right now. In a competitive market like housing, this has the extremely well-known effect of causing sticker prices to rise. Put another way, if you can afford $1,500/mo payments and the rate drops such that you would only need to pay $1,150/mo, the market will quickly react to increase prices to keep the overall monthly payment the same.
This isn’t a novel mechanism. It’s part of the reason housing has been such a wildly successful Investment vehicle over the last few decades. Interest rates fell, prices went up accordingly.
Are emigrating Californians responsible for some of these price increases? Sure, both generally and probably in some specific markets, I totally buy it. But everywhere simultaneously? I’m skeptical it’s responsible for as much of an effect size as people appear to believe.
2. This is how gentrification works. Many of these folks are coming because they’ve been priced out of wherever they’re coming from.
3. Housing can’t be both a right and subject to free-ish market mechanisms.
In your story you missed to mention the local homeowner who unexpectedly got a California price for her old house, the proceeds from which she can now use to send her grandchild to college and pay her medical bills.
Wouldn't be remotely a problem if they just built housing to meet the demand. Go take a look at property values in Bozeman and then look at the empty land all around it. There's plenty of room, but the zoning laws destroy supply and enrich current home owners.
Also, it's the US mountain west. There is a lot of space there to build more houses.
Housing isn't a zero sum game unless you have poor zoning.
Dude, there are a plethora of non-descript towns in America. My friend got married in one. They don't have cell reception. They talk on walkie talkies.
If you take the California money for your house, you can just retire there by buying and building enough homes for you and your friends.
This is always some imaginary pipe dream from the coastal elites. Life in the middle isn't idyllic. You guys always put up some imaginary plinth and then build this massive statue representing The Country Life So Beautiful and put a plaque on it and worship it like it was handed down by Moses.
But seriously. Life suuuuuucks there. These people will make it better.
Where am I allowed to live everyone? Lol
You’re only looking at the displaced resident being priced out. But there are many people who desperately want to move to coastal California and currently can’t because of housing costs. The migration is balanced by someone new being “priced in” to San Francisco or Los Angeles. Maybe even someone who wants to get out of their small Rocky Mountain town.
With a lot of problems of this nature, especially social issues, the key is to “zoom out” to get a clearer, more sane picture of what’s going on. Humans were made to migrate, and these “locals” can adjust.
I can recommend not moving anywhere near Greely CO where cattle are slaughtered by the thousands. It smells very bad. Also, driving in Wyoming there is effectively no speed limit between the highway patrol is very sparse.. and there isn't much there.
50%+ WfH OTG homesteads in the middle of nowhere but with access to fresh water and sunlight are a very good idea long-term, especially for raising a family, growing crops, mental health, well-being, and peace-of-mind.
Big cities are (and were pre-pandemic) only useful for conducting high-level economic activity due to the density of connectedness and potential for rapid wealth accumulation, but in general, they often tend to be terrible places overall for the most part, and people should escape to more tranquil and mentally-healthy places.
YMMV.
yeah, seriously "citation needed" here. Cities offer a LOT of things not usually found in rural areas. Try explaining to my trans sister about how cities are bad, and that she should live in a rural area, for example.
> Cities offer ...
Yes, I don't deny this.
Sister: Anecdotal example, sorry
None of this negates my impression and opinion which is a valid expression but not a universal fact up for debate. It is not a universal fact anyone must agree with or hold. In fact, it's arrogant to criticize or tell someone what their opinions and experiences should be.
Unless your trans sister has special medical needs only available in big cities, there is nothing special here. There are plenty of liberal small communities and there would be even more as people leave cities.
Doesn’t seem to be stopping anyone from moving here though.
See living/working in WA and shopping in OR for tax advantages as a similar analogy.
I'm from Missouri and I can tell you that most of the small towns are not idyllic rural paradises. They are farming towns which now have no purpose, no young people, and serious drug and suicide problems. These are not all friendly places.
They would all KILL to have an influx of young energetic people move in. They want to see the town survive.
We had two KKK rallies through the town square in my town in the 80's. We have so many right wing racists in positions of power now that I have no interest in living in a small town again.