Why COVID Will Revive the American Way of Life
Suburbia is the Light at the End of Millennials’ Rental Nightmare
Last week my colleague Chuck wrote an eulogy for short term rentals. Less than seven days after his article, Chuck has looked like a prophet, as AirBnB itself (the high overlord of the short term space!) laid off 25% of its workforce. The short term space overall is in full retreat, with Sonder, Zeus, and Vacasa all announcing major layoffs. It’s going to be ugly, it’s going to be brutal, and it’s covered nicely in Chuck’s article.
But one thing that it really got me thinking about was how Covid is going to affect the rental, and property space in general moving forward. And it lead me to a very interesting conclusion:
Suburban rebirth.
The revival of the American way of life (or Australian, for my down-under readers).
The youth of today is being forced to choose between chasing opportunity and having a great lifestyle, a choice that wasn’t faced by their parents. The simple fact is that, as a late 20s to early 30s individual working in a major city, a large portion of your salary is going to go to rent. Think maybe 30–40%. In the Bay Area, at Onerent, our standard 2 bedroom house rents for about $3000 a month — and this is for the greater Bay Area! In San Francisco city itself, $3000 will only get you a studio.
And don’t even think of buying a house — median house prices in the Bay Area have almost reached a million. And if you think this is just isolated to Silicon Valley — it’s not. Boston — 600K, LA- 750K, New York- 760K. With banks now demanding 20% or more for downpayment, a millennial today is going to find it hard pressed to buy a house before their mid thirties.
And when they do buy their house? It’s going to be alot smaller than where they’ve grown up. Most people I know in both the US and Australia — and to be fair, I’m from a upper middle class background — grew up in beautiful, expansive houses, with 3–4 bedrooms and a beautiful front AND back lawn.
When I mentioned a million dollars median per property in the Bay Area — that’s for pretty much a two bedroom house. You want something bigger? Try 1.5, 2 million even.
There’s a reason why they call this generation, Generation Rent. It is so difficult for us to get on the first rung of the homeownership ladder. And once we get on that ladder — it’s almost impossible for us to reach the same standard of living as our parents (well at least until our parents pass away and we outfox our siblings for the inheritance — looking at you, Brother).
And then Covid hit.
Covid has irrevocably changed the way that we do things. That old “work in the workplace” paradigm — it’s gone, forever. Facebook and Google have told their employees that they won’t need to return to work this year — Twitter has told theirs that they might never need to work in the office again.
The impacts of this are going to be beyond companies-on-the-cloud figuring out the absurdity of requiring employees to report to work when customers are fully virtual.
There’s going to be a major rethinking of the entire work-home geographical divide that has existed for two hundred years. And for those of you who think that we could never be happy working from home — tell that to the people pre-industrial revolution. Back then, everyone, from King down to peasant, worked, slept and lived in the same place. The work-home split is not only a human created construct, but it’s a very recent one.
The industrial revolution changed things because of the advent of modern transportation and factory technology. Now you could actually commute 5 miles without it taking half your day. There was actually a point, a need even, for you to be in the same place as your co-workers, working on the same factory tools. Technology has changed the way we work before, and it will again.
Just like Googling was the verb of the 2000s, and Tweeting was that of the 2010s, Zooming will be the verb of Roaring Twenties II. Because not only will working from home stop us from getting infections, it will save time on commutes, it will make us more productive, it will make us happier and more fulfilled individuals.
We will no longer be required to live within a commute of our work.
Which means that we, the middle class, will once again be able to afford a three bedroom suburban home with a front AND back yard. Our dogs will no longer get fat on the couch, our kids will have a place to go when we force them away from their screens, and we will have enough space to throw a football spiral without knocking over furniture.
This is the future of work — and life. Urbanisation over the past few decades has eroded the meaning of the American dream. While in the 60s and 70s it meant working hard to provide for your family, seeing your kids grow up in a nice neighbourhood and then kicking back to enjoy retirement at 55, today most young Americans work harder for less real wages, put off having children, sometimes indefinitely, and have no prospect of retirement until 70.
There’s going to be a seismic change in the way we live our lives. In the next ten years we’re going to buy properties away from major urban centres. We’re going to be able keep our good jobs while having a decent amount of space.
When Chuck wrote his article — he was eulogising short term rentals and the demise of the fortunes of the nouveau riche leaders of this market. If I am right — a big hole is going to be burnt in the pockets of old money — the owners of the skyscrapers that dot our urban lifestyle — people like Donald Bren, John Sobrato, and yes — Donald Trump.
But then again, I’m sure Trump will be happy to lose a few billion if it means the revival of the American way of life.
