As we start to adapt to what we are now calling our “new normal,†we see many people teleworking from home. With new ways to track employee output, many businesses are starting to realize they can save a significant amount of money by ditching their office spaces or downsizing thanks to teleworking. This shift in mindset is also affecting those that telework. People that live in big cities will start to migrate to smaller cities or even the suburbs.
During an earnings call last week, Redfin CEO Glenn Kelman said that we will start to see a shift of people leaving major cities.
“More people will leave San Francisco, New York and even Seattle, some for nearby towns like Sacramento and Tacoma that are close enough to support a weekly office visit, others for a completely remote life in Charleston, [S.C.], Boise, Bozeman or Madison.†– Glenn Kelman
What does this shift mean? What will this “new normal†be? More and more real estate agents are setting up virtual showings and selling homes with minimal person-to-person contact. According to Kelman, homes are still selling and in some areas, the real estate market is doing quite well. As more business allow teleworking, the major cities are starting to see bigger drops in real estate sales. Will this help to revive the suburbs as we experience this big city escape?
A real concern in a particular real estate niche is short-term rentals. They have seen their biggest losses ever. When asked about Airbnb Kelman said “Those are going to be in tough shape. There’s a whole economy that was built around the liquidity there that Airbnb provided. You could get pretty deep into debt and still have somebody pay your mortgage every month because Airbnb and other travel websites were so good at finding someone to rent it out. And I don’t think many of those folks have the reserves that Marriott MAR, -4.84% or that Hilton HLT, -3.62% does. Investors who own Airbnb properties are looking for immediate liquidity. At some level it’s Redfin, Zillow Z, -8.06% and Opendoor picking up where Airbnb left off. If they can’t get cash flow through one website, they’ve got to sell it through the other.â€
Related: 6 Ways to Invest in Real Estate
Kelman is basically saying Airbnb is done. It is hard to believe that an entire real estate niche is dying off just as fast as it appeared. Do you think Airbnb can recover? Also, do you agree with Kelman’s thoughts on the big city escape? Let me know your thoughts by commenting below or on the forum.
