“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
Why falling rents mean big trouble for NYC’s future
San Francisco apartment rent prices are dropping fast as tech companies embrace remote work and unemployment rises
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:
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.
Hi there. Thanks for stopping by. We use affiliate links to keep this site free, so if you believe in what we're trying to do here, consider supporting us by clicking! Thx ;)
Build a Portfolio Like Ours: Check out our FREE Investment Workshop!
Earn a 1.25%* everyday interest rate. No Everyday Banking Fees: Open up an EQ Bank Savings Plus Account! (Canada only, excluding Quebec)
Earn up to 1.75% on a US checking account: Open a High-Interest Checking Account through Emprise Bank! (USA only)
Travel the World: We save $18K a year by using AirBnb. Click here to get $40 off your first booking!
Don't Pay FX fees: We used the Scotiabank Passport Visa Infinite card to eliminate foreign exchange fees around the world! Plus, get 40k points in the first year, and free airport lounge access too! Click here to sign up!
Earn 10% Cash-back: Earn an extra 10% back for a limited time with a Tangerine World Mastercard! Click here to sign up!
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.