salaries for people in smaller cities will increase
You already see this happening in rural communities outside of big cities. "Tech-bro" approved towns such as Asheville, Knoxville, Ann Arbor, Twin Cities, etc, etc are getting so expensive the locals can't move. Where I am from in Southwest Michigan has been facing a worsening housing crisis for years.
Luckily for most of the country, the weather isn't as nice as it is on the west coast, so homelessness will probably not explode as much as it has here. On the other hand, you have to deal with shitty weather ;)
I think the reality is that our housing costs and our fuel costs will catch up with Europe's. In this case it sucks because never built out the public transportation capabilities that could facilitate this being as "pleasant" as it is in Europe. So now if you want to visit the rest of your country you're going to have to pony up for fuel.
Or the publicly subsidized healthcare and higher education!
Also why does public transit matter in a WFH/remote world? Seems to obviate it to a large degree, e.g. subway in NYC, which while used for many things, was majority used for commuting. It was losing large amounts of money even before the pandemic hit
My logic doesn’t really need to track with whatever you are talking about- look at the cost of housing in high cost of living places; has it gone down during the last two years of pandemic? Has literally -everyone- becoming a remote worker driven down the cost of housing? No; it has made it worse.
Is it cheaper to live anywhere on the planet now than it was 2,5,10 years ago?
Take for instance where I am from- Kalamazoo, Michigan. This is a great town I love with all of my heart but have no wish to live there. Houses are difficult and expensive to buy there! And compared to Seattle it is pennies. Wages aren’t rising in Kalamazoo to match the money coming in: but houses aren’t getting cheaper in Seattle either.
Residential real estate prices skyrocketing has more to do with government interventions. I fully expect ex tech hubs such as the Bay Area to trend down in prices in real terms over many years
Foreclosure moratorium, eviction moratorium, stimulus checks that allowed new households to form (kids moving out) as well as preventing the normal level of foreclosures, Fed buying trillions in MBS pushing rates artificially low, massive amounts of cash out refis to use in ad hoc projects that sucked up labor and resources for new builds.
Yes migration from HCOL to LCOL will drive pricing up too, but to say HCOL will go higher because remote work is here does not track logically at all. Sure, leisure areas will go up in value, work areas should logically decline. e.g. Manhattan, Chicago, SF, Seattle
Nebraska is not going to magically spring up natural beauty and culture.
If you worked in tech, SF was the pinnacle location to live for your career. If you were in Finance, it was NYC. There was no exception to this. You can live in any of dozens of cities and still get an enjoyable life/leisure. It's not equivalent at all.
So in this new world, an SF home will be worth $4m while an equivalent San Diego one $2m? No way. The disparity in amenities between the two is not big enough to justify that kind of spread, once you remove the work component. The entire reason SF became so expensive was relocations to work for big tech and the concentration of VC money. Not because it was unambiguously the most desirable city in the US or even CA.
So you take away the component that made it expensive to begin with and ??? it goes higher still ???
I have been working remote for startups since 2019 and for whatever reasons, you could attribute this to low interest rates I suppose in your favor, things have gotten INSANELY more expensive. NYC, Boston, DC, Seattle, SF, LA, Miami I don't think they are getting any cheaper. These are Americas Elite Cities and thats going to command a demand that might seem to defy logic.
However I think people genuinely love living in these big HCOL cities. Otherwise it would defy all reason why they have been population centers for hundreds and hundreds of years. Take for instance Amsterdam; has Amsterdam gotten cheaper in the last 500 years?
To my second point, even if we are lucky and the money gets spread around a little bit what happens to the person working for 7$ an hour at the Hyvee in the Ozarks just because a small flurry of people from San Francisco and Seattle decided to settle there? What happens when he can't afford the property taxes on his paid off home anymore because a a random demand driven spike has increase the value of the properties around him to a point where he can't afford his property taxes anymore?
What happens when he can't afford his medical bills because of this? I've seen what happens and its a hunched over old dude outside of a tent on the streets of Seattle.
This isn't really the tech workers fault or the locals fault, but the fault of our government to account for inequality. Just something I've been thinking about. I just don't think that remote work is going to make life easier for anyone in the short term, except for the already spoiled white collar worker.
Now that the constraint of working in a specific location is gone, yes, people will migrate to areas for desirability of living, not because they're forced to for work. However, price is an aspect of desirability. It's very hard to imagine how the Bay Area could maintain residential real estate pricing if all big tech went full remote. People like SF, but not enough to pay such a spread over arguably equivalently nice places that are much cheaper.
So yes, HCOL -> LCOL drives LCOL to be more expensive.
Also the reason cities existed in the past was because people needed to gather together to work/exchange goods. With remote work/internet that goes away, aside from education/leisure.
You seem to be implying Amsterdam exists because people like it, and not because it was a job center. I can assure you there were very few people hundreds of years ago picking cities primarily for leisure. The need to densify/build vertically lessens when there's no concentration of a downtown for work.
Plenty of people want to live in the Bay Area beyond those working in big tech. This isn't Detroit; there are plenty of other industries that hire people here. Not to mention all of the working class people who are commuting in from Richmond, Vallejo, and other LCOL areas. People want to move there for the Mediterranean climate. For the political climate. Not to mention the children of locals who have been living at home for extended amounts of time. Long-time renters. Remote work will not bring down real estate prices as much as you believe. Especially since housing scarcity props up the prices.
The real estate market, like all markets of the modern era, can remain irrational for longer than you can remain solvent.