Bay Area workers who took advantage of remote work during the pandemic to move to far away, lower-cost cities now may find themselves in a painful predicament if called back to the office.
Some of the hottest cities for those joining the Bay Area exodus — called “Zoom towns” for the frequent videoconferencing remote jobs required — are seeing home prices fall sharply from their pandemic peaks. August’s median home prices in Austin, Dallas and Boise, Idaho, are all down 18% from their peaks reached in May 2022, according to Redfin data.
Adding to the downward price pressure, Dallas could see a wave of homes hit the market next year that were purchased to be short-term rentals offered over Airbnb and similar services. Dallas recently adopted a ban on Airbnb-style rentals in single-family neighborhoods.
The pain is just starting to unfold in other destination cities. Florida, long derided by many Californians, became a popular choice for Bay Area residents favoring low taxes, affordable homes and few Covid restrictions. Miami’s median home price is off 4% and Orlando’s is down more than 6% since hitting a peak in June 2023.
The falling prices in these destination cities would have remained simply paper losses if not for a growing number of Bay Area companies abandoning their embrace of remote work in favor of hybrid schedules that require employees to report to offices part of the week.
Adding to the pain for these returning Bay Area workers is having to walk away from low-rate mortgages secured before the Federal Reserve began its anti-inflation campaign.
So are these remote workers being called back to the office stuck with losses?
“That’s the risk,” said Scott Anderson, chief U.S. economist for BMO Economics, part of BMO Capital Markets, whose parent bought Bank of the West this year. “There are a lot of folks that took out mortgages when rates were extremely low and bought houses during the pandemic — maybe even bigger houses than they probably needed — in markets they might not want to stay in now.”
“There’s some buyer’s remorse we’re going to see,” Anderson added. “There are going to be some folks who are going to be stuck there.”
Anderson’s point is echoed by those on the front lines representing home sellers in these destination cities. Many real estate agents are reluctant to publicly discuss specific clients who find themselves in this painful situation.
“They’ve been called back in some kind of capacity. At that point, they’re pretty much picking up and moving back,” Lisa Kohl, a real estate agent with We Know Boise Real Estate, an affiliate of Keller Williams Realty Boise, said in an interview earlier this year. “They’re selling their property that they purchased here, and going back to the Bay Area or to California.”
Boise was one of the hottest pandemic boomtowns, drawing a broad range of Bay Area residents to its outdoor amenities and high quality of life. (One Bay Area resident who moved to Boise during the pandemic told her Realtor she was surprised how many Boise residents forget to close their garage doors. She was told people keep their garage doors up until they return home.) Many who moved to Boise and other popular destinations weren’t planning to return.
“You had folks that thought the work-from-home situation was going to be permanent or else why go through the hassle?” Kohl said. She’s aware of one family last year that had to uproot their school-age children, sell their house and head back to the Bay Area.
Their emotional state “was not good,” Kohl said, declining to name the home seller. “But at the same time, when push comes to shove, you’ve got the employment situation that’s calling you back,” Kohl said, adding that Bay Area employees who put down roots in Boise may be able to find jobs in Idaho’s capital city, but likely won’t be able to replicate their Bay Area paychecks.
Note: Are you a Bay Area employee who bought a new home in a popular destination city during the pandemic but now has to show up regularly to your Bay Area office. If you want to share your story, contact Mark Calvey at email@example.com