Home workers flee US cities to seek a better quality of life

When the pandemic hit, metropolis residents seized the chance to relocate. The shift could change the country’s political landscape

After the Spanish flu ripped through America’s cities in 1918 the population of a little-known beach town in Florida called Miami rose five-fold in seven years to 150,000 as people fled the metropolises.

A century later, a similar phenomenon is under way, prompted by Covid-19 and propelled by the exponential rise of remote working and the crippling price of housing in city centres.

According to the US Postal Service, New York lost 110,978 people last year, an increase of 487 per cent on 2019. Chicago lost 31,347, San Francisco 27,187, and Los Angeles 26,438.

Many went to Florida and Texas, others to previously unfashionable places such as Boise, the state capital of Idaho, with a population of 229,000.

Some economists believe that the pandemic has speeded up what was an inevitable decline for so-called superstar cities, specifically New York (population 8.3 million) and San Francisco (880,000), which have peaked as hubs for people and jobs. “It was already happening but the Covid technology revolution has put that move on steroids,” said Susan Wachter, professor of finance at the Wharton School of the University of Pennsylvania.

“It’s massively shifted. The speed has been stunning. Pre-covid we were seeing a decrease in population in superstar cities, the least affordable cities. They were victims of their own success. But it was slow. You could move out, but you would lose that job. Now you can commute from Texas to San Francisco by way of Zoom.”

Second and third-tier cities such as Miami, Austin, Nashville, Boise and Boulder are now expected to boom.

“It’s just beginning. It will be a decade for this to play out,” Prof Wachter said. “But it’s going to be a new era of distributed urbanisation. These cities will become rivals and grow in ways we have never seen before. It’ll be exciting for them and the United States.”

Resilient New Yorkers had withstood the crack epidemic of the Eighties, the 9/11 terrorist attacks and the 2008 financial crisis. The pandemic appears to have been the straw that broke the camel’s back.

Upmarket areas of Manhattan are now like ghost towns. Hungry rats, which usually feast on restaurant waste or rubbish, are said to have turned to cannibalism on the Upper West Side. Normally cramped streets are empty and burglaries have soared. Property prices have fallen by up to 20 per cent.

Hannah Mcfarlane, who lives in Soho, said her building had 25 flats but only six occupants remained. “The apartment block was always noisy and bustling,” she said. “It’s odd to say, but I kind of miss it.”

Among the tens of thousands who have fled New York is Abigail Jaffe, 28, who works in public relations. She “took a leap of faith” and acted on a long-held desire to go and live in Austin, Texas, after her employer adopted remote working. In New York she shared a flat with a friend, but for less money she got a mortgage on a house in Austin. “I got a dog, I got a car, I’m buying a house. My space has exponentially increased,” she said. “I miss the energy that comes from being with colleagues in New York but I love a lot of things about Texas. I love country music. It was just claustrophobic in New York during the pandemic. There was nowhere to go, it was almost apocalyptic.”

Margaret Wurth, 35, a senior researcher at a human rights organisation, and her partner left New York and moved inland to a threebedroom house in a village. “We were both trying to work from this tiny 500 sq ft apartment, with no dining table even, just thinking to ourselves ‘why are we doing this?’ I cried the day we moved. New Yorkers are proud and are supposed to be able to stick anything out,” she said. But on her first weekend exploring the great outdoors she had a “quasi-religious” experience, and has no plans to go back.

For New York’s bankers the idea of a “Wall Street South” in Florida is becoming more real. Goldman Sachs is said to be considering moving its asset-management division there, and a recent study showed that at least 20 per cent of Wall Street firms are thinking along similar lines.

Ray Mcguire, a Democrat and former Citigroup executive running for mayor of New York, has pleaded with financial businesses to stay.

But the Republican mayor of Miami, Francis Suarez, is doing his utmost to lure them. Big names such as Elliott Management, Icahn Enterprises, Citadel and Blackstone are setting up shop in the sunshine.

Kevin Couper, 34, helped to start a satellite office for Wealthspire, a wealth management consultancy, in Boca Raton, southern Florida, over the summer. “It was night and day moving to Florida – no state income taxes, lower cost of living, better weather,” he said. “Only time will tell whether New York will ever recover.”

Katrina Campins, a well-known real estate agent in south Florida, said the suburban housing market there was “on fire” with bidding wars, incomers from New York buying in cash and prices up 30 per cent in some areas.

Ms Campins, who was a contestant on the first season of Donald Trump’s The Apprentice, said: “I was always relocating people from high tax states like New York but never to this degree. In a pandemic everyone went full speed ahead.

“A really important factor is schools. Schools have been open in South Florida. That’s a huge encouragement to people to move and then they stay.

‘It was night and day moving to Florida. Only time will tell whether New York will ever recover’

“The migration is across the board, financial people, tech workers, lawyers, entertainment people.”

The exodus from America’s big cities has two tracks. Some people are moving further into the suburbs, still within reach of the office. Others, who see a future of fully remote working, are moving to different regions.

“It’s not that everyone is fleeing San Francisco for Mississippi. They’re fleeing the centre of San Francisco,” Nick Bloom, a British economics professor at Stanford University, said.

“If you still have to go to the office two days a week after the pandemic you’re not going to move to Alabama, you’ll move to the suburbs.”

That has led to a “doughnut effect” in the housing market as prices fall in city centres and rise in the suburbs.

Prof Bloom, who has done extensive research into home working, said the response to it had been “universally positive” from employers and staff, and that it was here to stay.

“The stigma has gone. The ‘shirking from home’ thing has gone,” he said. “The average person spends $600 setting up their home office so it’s going to work a lot better.”

Before the pandemic, 5 per cent of work days in the US were spent at home. That rose to 50 per cent during the pandemic, and afterwards is expected to be 20 per cent, he said. Over the summer, 42 per cent of workers were at home full time.

Prof Bloom predicted a particularly bleak future for skyscrapers because people won’t want to work in them.

“Skyscrapers are horrible. People are nervous about getting on a packed subway train and then an elevator,” he said. “The Salesforce Tower [the tallest building in San Francisco] is virtually empty. I don’t see them being full.”

Technology companies are anticipating the move away from offices and cities. Mark Zuckerberg has suggested that half of Facebook employees will be working remotely within the next decade. Phil Libin, chief executive of Mmhmm, a video call company, has transitioned to a “fully distributed workforce” operating from wherever they want.

After the decision to go completely remote, Mr Libin’s staff moved out of San Francisco to its suburbs, or to Florida, Illinois or Washington state.

Mr Libin himself left San Francisco after 13 years for Bentonville, Arkansas.

Speaking by Zoom from a farmhouse there, he said: “I just decided to flee the city. Pretty quickly we decided that distributed working was going to be permanent. I was nervous at first but it’s worked great. We’ve hired a bunch of people.

“Our worst paid employee can afford to own and live in a great house in a safe neighbourhood. They don’t have to save up and wait until they retire.”

Rachel Weinstein, who works for a human resources software company, had shared a house with three others in San Francisco, paying $1,700 a month. After her company adopted remote working she quickly lived in five different cities in California, Montana, New Jersey and Colorado.

“I don’t have any intention of going back to San Francisco,” she said. “If I were to go back to San Francisco I would know so few people there now – 85 to 90 per cent of people I knew have gone.”

Monthly rent in San Francisco has fallen by 24 per cent from an average of $3,520 to $2,650, according to Zumper, a rental website.

Zillow, a property website, has been tracking “skyrocketing” house prices and “massive drops in inventory” in suburban areas across the country, particularly in a host of smaller cities, as people leave the biggest ones.

Of the hundred largest population centres in the US, the hottest housing market is in Boise, up 23.6 per cent last year.

The figure was so surprising it was initially thought to be a data error, said Jeff Tucker, senior economist at Zillow.

Boise was followed by Spokane, Washington; Phoenix, Arizona; Ogden, Utah; and Tucson, Arizona.

“That desire for more space is very rational,” Mr Tucker said. “People need a home office. There are also less people moving into the big cities.

“This isn’t just people packing their bags and moving to Boise, Idaho.”

Ultimately there could be political ramifications from the demographic shift. As populations in Republicanleaning southern states increase, they could be assigned more members of Congress.

The influx of newcomers from Democrat states such as New York could also tip the political balance in Texas and Florida, which have been Republican in recent presidential elections.

It is also notable that nine of the 10 states that lost the least jobs in the pandemic had Republican governors.

With fewer pandemic-related restrictions, those states have attracted workers from Democrat ones, and their economies have fared better.

An annual survey by U-haul, the self-moving company whose trucks are ubiquitous on US roads, provides a fascinating insight into which states people have been moving to.

For the first time the top destination for one-way relocations was Tennessee, which had not featured highly in previous years.

During the pandemic, people were drawn by the Great Smoky Mountains and the prospect of a rural life.

“I’m seeing a lot of people from California move to Tennessee because they’re attracted to our lifestyle,” said Jeff Porter, U-haul’s Nashville president. “Tennessee has no income tax and is very business-friendly. There are plenty of jobs. People and companies are taking note.

“We’re attracting tons of new residents. We were seeing movement before the virus hit, but I think the situation has pushed a lot more people away from the West Coast to our state.”

The next most popular destinations were Texas, Florida, Arizona, Colorado, Missouri, and Nevada. California ranked last, by a lot.

In Florida, they are now expecting years of explosive growth in the 2020s.

“Florida’s gone crazy,” said Dr Paul George, resident historian at Historymiami Museum. “It’s similar to what happened after 1918. The country came out of that pandemic and the population here skyrocketed. People came to Florida from the north, from New York, New Jersey, Philadelphia, Chicago. It’s always been a place for starting over again.”

‘I have no intention of going back to San Francisco. I would know so few people... 85 to 90 per cent have gone’