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“I’ve never been allowed to work from home, but with the pandemic, it’s now mandatory. For the first time ever, as graphic designer, I can work from home full-time! Maybe I’ll move to Barbados and work from there!”
“I went to visit my parents in Nova Scotia before everything locked down. After shit hit the fan and businesses started locking down, my Toronto employer told me to work from home. After spending several months here in nature, I’m not going back.”
“I’m so glad we moved from Coronado to Bend, Oregon. Our housing costs are much lower and as a result we are in a much better financial situation.”
These are just some of the stories we heard from friends during this pandemic. The reality is that remote work has fundamentally changed how people work and as a result, enabled (or rather, forced) them to redesign their lives.
As the pandemic ravages the world, upending everything, one of the (very few) positive things that have come out of it is the rise of remote work. Previously, employers were hesitant to let their employees work from home because they thought people would just dick around watching cat videos. The pandemic, however, has forced companies to conduct the biggest involuntary experiment in the labour market ever: what happens if everyone works from home rather than commuting into the office?
And it’s not just in the tech field either.
My editor from Penguin Random House emailed me recently and as we were catching up, she mentioned that she no longer lives in New York! A life-long Manhattanite, the pandemic has forced her to moved out to a small town because, like it or not, her work is now 100% remote and why pay Manhattan prices if you don’t need to be there?
So what does this mean? Is this the future? A mass exodus from crowded, germy big cities to the lush, wide-open spaces of the suburbs and countryside?
I discussed this with my friend, J.L. “Godfather” Collins recently to get his perspective.
“These things happen in cycles”, he wisely (as always) intoned. “After the 2nd world war, returning soldiers married and moved their families into the suburbs to get away from the crumbling inner cities.”
“As a result of this exodus, real-estate prices in downtown Chicago (where I’m from) collapsed. Crime rose, and inner-city became a synonym for poverty while the suburbs prospered, filled with middle class families dreaming of a white picket fence and 2.5 kids. Then a few decades later, downtown’s attractive property values enticed the next generation, who got priced out of the suburbs, to take a chance on the inner city. And when they did, those inner cities starting to gentrify, and all of a sudden the downtown loft from the show Friends became the dream. Everyone wanted to live in the city.”
“And now that same downtown loft is overpriced. Being able to walk to work is worthless, because your office is in your living room. So now we’re starting to have that same migration to the suburbs again. It’s all a cycle.”
He then sent me this article from James Altucher called NY is dead forever. Right afterwards, coincidentally, I had a call with my friend Grant Sabatier who left NY right before the lockdown and relocated permanently to a town that has since reduced his rent by 7X.
It seems like everyone I know who used to live in NY no longer lives there.
So, will these “mass exoduses” be permanent? Has the pandemic permanently changed how we live and work?
Here are 3 reasons why I think this is true.
People Are Migrating Out of Cities
Rent prices keep going down in Toronto but rising in nearby cities
~~BlogTo
Why falling rents mean big trouble for NYC’s future
~~NYPost
San Francisco apartment rent prices are dropping fast as tech companies embrace remote work and unemployment rises
~~CNBC
These are just some of the headlines confirming this huge migrational shift from big cities to smaller towns, and it’s taking rental prices and property values with them. A recent survey in Canada revealed that 1/3 of Canadians are no longer interested in living in urban cities and Americans, who were already migrating away from big cities, are accelerating their plans due to the pandemic. People are voting with their feet and cities are getting the boot.
The long-term effects of this on real estate prices will be profound. Amateur landlords who bought up scores of condo units in city centres hoping to AirBnb their way to financial independence are seeing their empire crumble. Unable to rent their units for enough to pay off the mortgage, they’re bleeding money and growing desperate. Many are putting their units onto the long term market or selling. Heck, we’re staying in a unit like this right now. I ran the math. The rent I’m paying is generating negative cashflow. My landlord is losing money every day I sit in their unit.
And keep in mind these were the people taking up all the housing stock and making rentals for local residents so high they were being priced out of their own city. So my sympathy for their predicament is somewhere around zero.
Remote schooling is in
With schools shut down during the pandemic, families have had to adapt to online learning. Some have struggled with this arrangement, but not all. In fact, some kids are even thriving with this arrangement.
With every crisis comes innovation. With schools opening back up but without clear parameters on how social distancing will be achieved, some parents have decided to create “Learning pods” as an alternative, safe, method of learning. These are basically a small group of parents and kids coming together and pooling their money together to hire an educator to teach them from home. By keeping the groups small, it’s easier to social distance and contact trace.
I think it’s great. We wrote about World-Schooling before, and back then it was seen as only an option for hippy dippy weirdo-types. But now, because of COVID, everyone has to World-school because they have no choice!
What I predict coming out of this is that now that everyone has to learn how to teach their kids remotely, it will become more accepted and widespread. Governments and school boards will be forced to accept and support remote learning as a permanent practice, which mean we’ll see more resources and curriculums available to help families do this. Educational companies will detect a new market and produce more products and content to fill this niche. And tech companies will create apps that will help kids learn and connect with other kids who are doing this as well.
In other words, World Schooling will become more normal, which makes relocating to inexpensive cities much easier.
Geo-arbitrage is becoming mainstream
As more and more jobs turn remote, people are realizing what we realized five years ago. By moving to a less expensive city, they increase the gap between their earnings and spending and turbo-charge their journey to FIRE. Employers have accepted the idea of remote work, commuting to work is so 2019, and now people are realizing: Hey, I have disposable income for the first time ever!
Our first experience with geo-arbitrage happened when we travelled the world after quitting our jobs and finding out that we only spent 40K/year—less than how much it would cost us to live in Toronto. As a result, we’ve been using geo-arbitrage to our advantage for the past 5 years, keeping inflation in check and bringing down our withdrawal rate from 4% to around 2.8% since our net worth has grown to $1.45M.
So not only did we get to live multiple lifetimes by seeing the world, we made our retirement safer by side-stepping inflation. And now you can do it too!
Maybe your version of it isn’t to travel the world with a backpack like us, but to adapt it to local arbitrage. Move out of your expensive city and increase the gap between your earnings and expenses. Not only will you escape the stress of living in the city, you might find your journey to Financial Independence got that much faster. Plus you’ll be less likely to catch COVID.
If you love living in a big city, don’t leave it entirely. Consider splitting your time between expensive big cities—like NY, Vancouver, or Toronto—and escape the winters by moving to warmer inexpensive places like Las Vegas, Nevada, Tucson, Arizona, or Abbotsford, B.C. By averaging your accommodation costs, you can still save a ton of money while enjoying the benefit of seasonally switching between cities.
Here’s a list of inexpensive places in the US and Canada you can move to reduce your costs and fast track your way toward FI:
US: https://www.thetravel.com/cheapest-places-to-live-us/
Canada: https://www.simplerate.ca/cheapest-places-to-live-in-canada/
What do you think? Is remote work and geo-arbitrage the way of the future? Are you planning on taking advantage of permanent remote work to get to FI faster? Let’s hear it in the comments below.
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I hope all the angry people who hate cities can now leave and find whatever it is they’re looking for, and I hope that will drive down the downtown prices for people like me who hate driving, and want to be able to walk to the local market, and who like theaters, museums, opera, ballet, and high energy nightclubs. I’ve been geoarbitrage-ing for the last eighteen months in small town America, and the moment the pandemic ends, I’m headed back to the city, expensive or not!
Going to places like markets/grocery stores, restaurants, movie theaters, daycares, schools, clinics, malls, parks/playgrounds, etc. is actually much more convenient in the suburbs than in the cities. In the suburbs, we can literally get to all those places with a 5-10 minute drive, whereas I doubt you can get to many of those places by taking public transportation in the cities in that amount of time. You may have to spend at least double that amount of time just standing there waiting for the bus/train and walking to the bus stop/train station. Also, very tough to take public transportation while carrying 7 bags of groceries.
Most people rarely go to the ballet, museum, and opera. Maybe at most 1-2 times every few months? So why not live in the suburbs and go into the city only for those special occasions?
Crescent Moon, you missed the part where I absolutely don’t want to drive (or even own a car). I don’t want to sit in traffic. I don’t want to look for parking. I don’t want to worry that some idiot in an SUV is going to hit my car. I spent two thirds of my life living in the suburbs, and the rest living in downtown areas, and the downtown areas are so much better for me – if you live “downtown”, but can’t walk to most of the places you want to go, then you moved to the wrong neighborhood! And when you live on the same block as the baker and the green grocer and the butcher, you just stop there every day or every other day on your way home, to get what you need for dinner… getting a week’s worth of groceries is what you do when you live in the suburbs and drive a big SUV and going to the grocery store is a half day event. I’m looking forward to getting back to my European lifestyle. Thank you for staying in the suburbs and making city living more affordable!
I live in a big city. I can get to all those places with a 5-10 minute walk.
Sincerely,
ARB—Angry Retail Banker
I read all your posts and appreciate you sharing your knowledge, but I haven’t commented before. It seems odd that you criticize (rightfully) AirBnB for its effect on local renters and rent hikes, but your nomadic lifestyle depends on AirBnB. You’re using and supporting a company that has created hardships in many cities.
And speaking of hardships, distance learning is a great option for those of us with time and resources to educate our kids. Many parents don’t have those resources. So while those who are FI or at least well off embrace remote learning, we need to continue to make sure families at all income levels have access to quality education.
Not really. Now that we slow travel, we rent out places a month at a time or more, so we rely on short term lets or sublets these days.
Remote work – yes. My wife liked going to the office because of work/life separation. But now she realizes remote work is a lot better. Corporations like it too because they can downsize offices and save $$$.
Geoarbitrage – temporary. People that like the city will stay in the city. People that tolerate the city probably will move out. We’re staying in our city for many reasons. We enjoy the amenities and the feel of our city. I lived in the suburb for 10 years and I didn’t like it. Politic is also a big issue now in the US. I don’t want to live anywhere with a big population of Trump supporters. It’d drive me nuts. Once the pandemic subsides, cities will be more liveable again. People that love city living will come back.
Remote learning – This is a lot easier for privileged kids. Pods are for privileged kids. Kids with working-class parents can’t afford to hire a teacher. Well-off kids with a stay-at-home parent will benefit from pods. Virtual schooling is a huge problem for working-class parents. We’re doing okay, but some of our friends are really struggling. Every parent I know likes regular school much better than virtual schooling.
I second this. It’s been obvious for a long time that there’s a stark divide between the relatively well off vs everyone else with respect to schooling. A complete conversion to remote schooling will only make this worse. For example, one of the major issues that seems to have appeared during the last 6 months is that many families don’t have (1) decent internet access, (2) devices that can be used for learning (iPads, computers, etc), (3) good learning environments at home. On top of this, most of the parents in these cases won’t have the luxury of working at home due to being in jobs that really do require a physical presence.
On the flip side, for those of us who are a bit better off, it does have positives, but some a lot of this is going to be coloured by poverty issues as well – eg: we can afford to send our kids to day camps and such that are enriching and unlikely to be sources of COVID (there is a high correlation between economic status and disease risk already), but it creates a really skewed world view for kids when they don’t have to interact with kids from families that don’t have such an easy go of things.
Sorry to say, it’s not the taxpayers or the “well off folks” that should be subsidizing for the poor.
I mean if you know your barely making payments and still have 2++ kids, hoping “subsidized daycare, child taxes, more RESP bonus” will carry you, then what are you really teaching your kids.
Sorry to say, but that’s a pretty callous perspective and horrifically myopic.
1. There’s lots of ways that folks can end up in this situation – divorce, job loss, injury, etc. I grew up in just such an environment but was lucky in many, many ways.
2. Punishing children for mistakes that their parents may have made (which is really what you’re doing, after all) is just wrong. Did the kids ask to be born into a negative situation?
3. As a society, we end up paying one way or another. Today’s kids falling through the cracks are tomorrow’s drug addicted homeless breaking into my house and stealing my things.
4. Many folks who are well off (and I count myself among them) have experienced either a great deal of luck or been helped out by people around them. There’s very few people in this world who have truly ‘made it all on their own’.
Not all Trump supporters are bad people! In fact most of the ones I know aren’t. Most people of all political stripes are quite lovely imo 🙂
I grew up in a rural area, moved to a smallish town adjacent to a good-sized city. Never wanted to live in a city; too chaotic for me but to each their own. I worked from home for 4 years before my current job – now commute 70 miles round trip 3x/week and wfh 2x/week. I and a few of my coworkers are leaning on the boss to change in-office to as-needed. I LOVE WFH!
My kids (13 and 17) are doing a hybrid model right now with small class sizes. My 17yo is a senior and would prefer normalcy but this schedule means she can pick up more work hours so she’s not complaining too much. I quite like this model and half hope they keep it.
I think this is an interesting take on population movement predicted in the US between rural and urban. I’m not sure I wholeheartedly agree with it, but I think there’s some good logic here. That said, I think it’d benefit from having a more balanced view of things.
Even if remote work and education are here to stay, people don’t live in cities solely for easier physical access to the office and school. It’s largely, I think, for culture: museums, universities, events, festivals, etc. Not to mention a larger variety of food, shopping, and other ways to spend your money on entertainment. That’s atop the ability to walk out of your place and go for a walk and see more than cloned suburban houses riding up the same cul-de-sac layout one after another.
I wouldn’t really say one direction is “better” than the other, but there are certainly differences. I think you’re right that people who were teetering from city -> suburbs will angle more towards suburbs. And prices will probably drop back to reality, though. Cities have been overpriced more recently. Mr. Collins is correct, identifying it as a pendulum swing.
Great thoughts, thanks for sharing.
I don’t understand how all of this will work long term for taxation. Right now, in a temporary situation, people have up to 183 days before incurring tax responsibility in their remote location (assuming they are out of state or out of country.) After that though, they are effectively creating a business entity in that new location, and that local state/etc. are going to want their taxes and unemployment insurance and etc. And if the business does not have an entity with a payroll setup there, that is expensive to establish, especially for just one potential worker. Internationally this can be more or less severe. Not sure how the people running off to Barbados are managing this, and would like to know! My company is telling people definitively that they cannot work outside the state where we have payroll setup for more then the 183 days, and may end employment if necessary to avoid setting up new business entities.
Here’s my suggestion regarding the tax issues. Maintain a “local address” for tax purposes and live wherever you like in a “secondary address”. People can have a primary home and a cottage and live in either location, why not a primary residence for tax purposes and a secondary residence for…remote work. If you say your primary address is in one location and you are in another location, who would know otherwise?
I live in San Francisco and personally love it here and have rent control so I plan on staying here! My work has always had a 2-days a week remote work policy but I think we all value have some time in person for whiteboarding, sense of community, etc so there’s no way we’ll go fully remote permanently. Even after I leave my job, I plan to do the part-time thing and sublet my place a few months of the year to slow-travel but continue with SF as a home base. That’s assuming/hoping the US doesn’t fall apart after the upcoming election. Thankfully I was born in Canada so might move there if needed. 🙂 Which cities do you recommend in Canada as best places to live without a car?
I live in Vancouver, B.C. (no kids) and I really have to advocate for it as a city I don’t want to leave and which is also easy to live in car-free!
I can easily walk or bike everywhere I need to go, and for rainy days, there’s plenty of frequent public transit.
Taking trips outside of town into the rest of B.C. obviously requires a vehicle, but there are loads of car sharing options. We sold our car earlier this year and we’re doing just fine. Much cheaper to rent a car for the weekend occasionally and have no further financial responsibility, than have to pay maintenance, parking, and gas forever!
Vancouver is also a really beautiful place, with a good approach to Covid and lots of green and coastal outdoor space to recreate and meet physically distanced friends. So I actually feel very lucky to be living here during the pandemic.
I also want to point out the importance of being close to a support system during the pandemic. All our friends live here in the city – why would be leave them? We all need each other at a time like this.
So, even though we can work from home now, we are not planning on geo-arbitrage. And yes, I know that Vancouver is known as an expensive city, but I think right now, given all the above, it is worth it for our quality of life.
I’ve thought of this question a bit and don’t really have good answers. Vancouver seems good but always has been expensive, more so now. Toronto is probably doable. I’ve never lived in either of these cities.
Places that I have lived in Canada: Montreal, Kitchener-Waterloo. Montreal is definitely liveable without a car, although if you want to leave the city or do certain trips between neighbourhoods, cars make things a lot easier. K-W is getting much better (new Light Rail).
Quebec City seems quite inexpensive, and is planning a tram. But not speaking French might be a problem there. Not sure quite how good the transit is either.
If you don’t speak French, I would recommend staying away from Montreal. I do speak French that I learned while living in France. But when I visited Montreal (I was checking it out to see if I wanted to move there), I quickly found out that I didn’t speak “the right kind” of French. So I switched to English and felt even more unwelcome. Long story short, I crossed off Montreal as a potential place to move to.
c’mon, really? There’s a long and complicated history here, but I completely disagree with this assessment of how Montreal is right now. I stand by my statement that an anglophone could definitely live in Montreal just fine.
There is a large population of Montreal anglophones: 700,000. There are lots of English institutions (universities, hospitals).
There was a NY Times piece in 2019 (“Culture Shock for French in Quebec: ‘We Smoke Cigarettes, They Smoke Pot’”) about French from France (FFFs) immigrants to Montreal. Somehow 130,000 FFFs are just fine with living in Montreal.
Quebec City would probably be more difficult.
Well I was there as a visitor so maybe that was part of the issue? Don’t know. All I can tell you is what I experienced and my experience was that I didn’t feel welcome. YMMV.
I live in Montreal and know many people who do not speak a speck of French. If you find the right place to live, west island, parts of NDG, Westmount and other places, it is really easy to get by knowing only English.
In Quebec City, outside of the tourist area, it would be difficult as an English-only speaker.
To the original question, it is super easy to get around Montreal without a car, there’s an enormous underground area during the winter months, and a great transit system.
Both my partner and I hope that our employers will allow us to continue working from home indefinitely! Subtracting our commute has improved our quality of life dramatically. However, my employment is contingent upon consumers also choosing to access our service virtually rather than in-person. If demand for service online isn’t consistent or so consistent that employers realize they need fewer humans to facilitate them, employment itself may become more precarious. Has anyone else read commentary about this consequence of increasingly remote work?
My husband and I were just discussing this last night. We’re Canadian but lived and worked in LA for the past few years where salaries are high but so are the living expenses. We’re now back in Canada and are both hoping and looking for remote jobs.
I personally feel like (only anecdotally and based on absolutely no research :)) that a lot of companies (especially in Canada) will go right back to wanting their employees in the office. There is a bit of an old-school mentality here, and too many employers have trust issues.
I also feel that most of the companies who will allow their employees to work remotely will still be looking to hire employees in their area. This allows for them to ensure they’re nearby for meetings, client relations and events. And as CarrotStick mentioned above, there are tax implications for having employees work all over the place – I’ve seen some friends run into this issue. Though a solution for that is to pay more employees as contractors.
so happy that my fellow FIRE community members have acknowledged the inequities remote schooling presents!! thanks guys – glad to see im not the only one concerned with this!
we also live in an urban, downtown & will never move to the suburbs! the diversity of our neighborhood provides immeasurable quality to our lives, as we have worked from home for years. although we look forward to our upcoming geoarbitrage, with no work, it will definitely be in a city, not the countryside!
We moved to a very run down and junk filled house (that we are fixing up) in the suburbs from the city last year because people were stealing our clothes off the clothesline, our garage got broken into too many times, there were too many car jackings, and the people asking us for money got too annoying. We just didn’t feel safe anymore. We are working class and our jobs need us to be physically there to make and fix things so can’t work remotely. Luckily all our kids are grown up or they would be home attending remote learning on their own while we go to work. They would also have to share a computer.
Presumably I’ll need to teach in person again one day. Teaching, ideally, is really about creating communities and it’s hard to do that online. But until then I’m planning to not be in Waterloo. We are not currently geo-arbitraging, Wellington being significantly more expensive than Waterloo (but less than Zurich).
As others, I do wonder about inequities about homeschooling. The school system is far from perfect but it has some advantages for people who don’t already have all the advantages.
Speaking of things coming in cycles, I’m curious if there will be a backlash against remote work and learning once the pandemic is over. There is something to be said for having distinct spaces for work and home and the benefits/disadvantages of remote will shake out differently for different people.
Interestingly, when I saw “geo-arbitrage” I thought not of employees being able to work wherever, but of an employer being able to hire wherever. Once the office is gone, why pay someone in North America $100k a year when you can hire someone in Russia for $20k or India for $7k?
RPC, I wondered when someone was going to say this. There is already talk in the Tech world on the new remote office.
-If you’re remote, “we can pay you less”
-If you live out of state, how do state taxes work?
It’s just talk right now, but employers are thinking about it. Also, in the programming world subbing out work internationally has been going on for a while.
My husband’s boss is on a cycling team with CEOs and owners of some of the largest companies in Canada. They have all agreed that employee productivity dropped after the first few months after covid started (once the fear of losing their jobs eased). They all agreed that they are EAGER to get employees back in the office.
both my kids are COOP students, and really want to work with real people, not be stuck in their bedroom. One got his wish, and the second is still waiting.
I never left the office, I love it now. There is less distraction here, as no wife kids, and neighbors making noise. Yet many of my colleagues love it, and swear they will never come back. To each his own.
Best place to live in Canada? Victoria BC… no doubt, if you can afford it.
Hey FIRECracker – interesting post!
As for the non-education related topics being discussed here, I’m definitely on the suburbanite WFH side of things. (Of course, I see the benefits of city life – they’re just not for me).
I do, however, wonder how things will play out after COVID. I’m hopeful that employers will be more accommodating to the WFH lifestyle, but I could see a bit of a rubber band effect happening as well (especially if they’re seeing drops in productivity).
Oh well, I guess we’ll find out in 2022! :'(
I’m an academic and born city slicker, who owns a condo within walking distance to campus. We’re all working from home right now, but as others have stated, you can’t replace the in-person educational experience, especially for undergrads and younger students. Once covid ends (and I’m convinced that with the entire world affected, we’ll have a vaccine soon-ish) I have no doubt my university will (gleefully!) return to its old ways of doing things. I think the whole “work from anywhere” thing is really only for companies that can truly go fully remote, and that’s a small subset of our economy, really. My 2 cents 😊
such schadenfreude for home owners
Covid 19 will not (100%) change the nature of work for the majority of the world population.
From the employers perspective – it is an intrinsic nature of the majority of businesses to capitalize its employees time (slavery).
From the employees perspective – it is an intrinsic nature for the majority of population be unfocused and wasteful with their precious times (childish).
These two extremities are more observable in wealthy countries.
COVID-19 somehow is making the world to take a new look in things they do when it comes to busnesses
Not to be a downer, but this isn’t good news. People with high-paying jobs buying up all of the SFH real estate means that families who relied on them are getting priced out. And geo-arbitrage going mainstream just means that the rest of the world is on track to get expensive too. Vanlife, RV life, full time world travel, using Airbnb, etc… these things used to be a refuge for people who wanted to check out of the rat race. But now, those avenues are being added to the rat race meaning there’s no cheap escape, not even in SEA.
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