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The skyline of Austin, Texas. (Carlos Alfonso photo)

When executives at Google, Apple and other major U.S. companies told employees in 2020 that they should plan on working remotely for the long term, they likely had no idea of the migration explosion they were about to set off.

With no reason to pay sky-high rents in cities like New York and Los Angeles, workers suddenly decamped to cheaper climes. This migration rocked the commercial and residential real estate markets in the places they left, like San Francisco, which saw office vacancies zoom by 91 percent, and boosting the fortunes of smaller cities such as Austin, Texas; Nashville, Tenn.; Denver and Portland, Ore.

These “18-hour cities” — so called because they’re somewhat sleepier than the nation’s round-the-clock metropolises — ticked all the new boxes that remote work requires, namely offering more space and more-affordable living.

At the same time, these new “in-migration” professionals — newcomers who planned to set down roots and stay in their new homes —weren’t willing to give up all the benefits of urban living. The destinations they chose had to be vibrant places, with new work opportunities available, if needed, along with plenty of fun things to do off the clock.

Cities like Austin, with a population of 950,000, were perfectly poised to absorb these newcomers. The city was the most popular destination search among users of the real estate brokerage site Redfin. International auditor PricewaterhouseCoopers’ (PwC) Emerging Trends in Real Estate 2021 survey placed Austin as the second metropolitan area to watch in 2021, after Raleigh-Durham.

When demand surged in the Austin real estate market last year, realtor Jordan Moorhead said his clients who fled larger cities cited density, along with price, as the main motivator. Now, as the Covid pandemic enters its second year, Moorhead’s clients aren’t citing density so much as wanting an affordable place to live with a “cool” vibe.

The rise of progressive cities

Austin offers “a really good lifestyle [and] no shortage of things to do,” said Moorhead, host of the podcast Austin Real Estate Investing. Besides the city’s famous live music scene and abundance of bars and restaurants, there are pandemic-friendly outdoor recreational spaces, with places to walk, hike and kayak.

Besides Austin, popular destination cities in the “affordable West and South” include Phoenix, Salt Lake City and Boise, according to a report by John Burns Real Estate Consulting, which looked at U-Haul statistics to identify moving trends. Jacksonville and several other Florida cities saw a Sun Belt boost. The “out-migration” markets left behind were New York, San Francisco and Chicago.

Redfin estimates that New York lost about 275,000 residents in 2020, more than twice the number of people who left Los Angeles.

The relocations are “exacerbating the housing-supply shortages in more affordable parts of the country,” Redfin chief economist Daryl Fairweather said in a report on the firm’s website.

Employer-spurred migrations

In Austin, the average home price in 2020 hit a record $365,000. Other indicators that reveal that migrations have affected the housing market include a rise in housing permits in eight of the 10 most popular markets surveyed by Redfin. The Mortgage Bankers Association reports that mortgage applications for new home purchases in January climbed 19 percent in 2020.

Progressive smaller cities found themselves on the right side of trends, such as sustainable living, that were already in place but got a kickstart during the pandemic. The year 2020 raised awareness of racial and income inequality, with surveys such as PwC’s report showing home buyers placing importance on these issues.

Some companies actively encouraged migrations. Stripe, the San-Francisco-based payment-processing platform, offered workers $20,000 bonuses (although with a possible 10 percent pay cut looming) to move out of the Bay area, the nation’s most expensive place for goods and services, according to Bloomberg News.

Apple Chief Executive Officer Tim Cook was among a number of top execs who predicted that most workers wouldn’t return to the office before June or July 2021. Microsoft announced that it was making part-time remote work permanent. Facebook co-founder Mark Zuckerberg went further when he told The Verge that he expects up to half of the company’s employees to be working remotely within five or 10 years. If other companies follow suit, the in-migration trend could prove to be long-lasting. A third of homebuyers told Redfin they would relocate if remote work became permanent.

Post-pandemic migrations

Offering the possibility of remote work may become a crucial tool for recruiting and retaining employees even after the pandemic ends.  About one in two workers say they will leave their job if their employer doesn’t offer remote work post-Covid, according to a report by Owl Labs.

That may mean another round of migrations is to come, and that has commercial real-estate investors excited at the prospects of 18-hour cities in the post-pandemic world.

But don’t count big cities out yet. The moving website MoveBuddha’s top destinations for those fleeing the Bay area included Austin, Texas; Portland, Oregon — and New York. Eileen Richter, a licensed real-estate broker with Compass in Brooklyn, says sales of smaller homes there, particularly those offering office and outdoor space, never slowed in 2020.

“New Yorkers choose to live here — we’re strong, resilient and creative,” she said. “It will take some time, and it will never be the same [post-Covid], but what is?”

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