The Rise & Lasting Effects of Zoom Towns

Did anybody invest in housing shorts this time? In the movie “The Big Short”, a few brilliant finance professionals predict that the US housing market is going to crash; they invest in short contracts (put options) and make literally billions in profit.

Now the market seems to be on the verge of another massive change. After contagion, lockdowns, riots, and sharply rising crime rates, a mass exodus is occurring from big American cities. City living has always been difficult, particularly for younger people, and now they have a way out that might not cost them their jobs – Zoom Towns.

From Trickle to Flood

2020 might be remembered as the “year of the regression”, as the move from towns to cities is reversed. Millions of workers, now accustomed to teleconferencing, have decided that, if they can’t go to the office, then there’s no reason to pay exorbitant rent to live near that office. This trend was already apparent before COVID 19, with 20,000 families leaving large cities in 2016-2017. But now, the rush is on. From February – July 2020, 15.9 million Americans requested a change of address, while 80% more people moved out of NYC and San Francisco than moved in.

So the move away from cities is not totally new, and it’s actually something that governments are accommodating. Along with 5G communications, there is an effort underway in the US, with its National Broadband Plan, to improve internet access across the country, a move which is vital for promoting remote work. This is in addition to Elon Musk’s Starlink service, which has the potential for 1 GBPS speed (but, at a projected monthly price of $99, might not be worth it).

Zoom Gloom

The rapid growth in suburban and rural areas hasn’t been great for everyone. Those already residing in quiet communities now face disruptions due to more people, construction, stress on infrastructure, and increased housing prices (and therefore taxes, which aren’t always affordable for retirees). For example, as of August, median home prices in US rural areas increased more than 11% year over year, while city prices grew less than 7%. For current residents, the Zoom Boom negates the very reason they live a rural life in the first place.

In addition, moving to Zoom Towns is not an option for everybody. For the FAANG (Facebook, Amazon, Apple, Netflix, and Google) crowd, working remotely is something that many of them have been doing since the start of the pandemic. However, for “hands-on” professions like manufacturing, construction, and transportation, being physically present at work is essential. Still, with the increase in Zoom Town populations, there will be more need for these professions to serve growing demand, and so employees in such fields still have a chance to get out of the city rat race.

The Long Term

Presently, approximately 33% of employees in the US work remotely, and two-thirds of these people would like it to stay that way. This translates to tens of millions of workers who don’t want the stress of traveling to work or being in close proximity to others. It stands to reason that many of them are willing to permanently give up on the amenities of living in big cities, and besides, with services like Amazon, shopping isn’t what it used to be.

This is similar to the potential shift in the way we do business, like, for example, relying on Zoom conferences instead of flying to in-person trade shows. The amazing speed of the growth of Zoom Towns makes it difficult to appreciate what it means for the long term, but it could be the break that society seems to be looking for.

The elimination of the daily commute for millions will benefit the environment and reduce expenditure on city infrastructure. Suburban and rural living might lead to a reduction in stress-related diseases and national crime rates. It’s also quite likely that small-town living will change cultures in the way that the massive move to cities did the same (only 30% of people worldwide lived in urban areas in 1950, as opposed to 55% in 2018).

A Rural Revival

So many predictions about the future show people living miserably in over-crowded cities, full of crime, poverty, and pollution. But maybe COVID 19 and Zoom Towns will change that. If the move to towns, small cities, and suburbs becomes permanent, we could see a great improvement in the average quality of life.

Millions of highly educated workers will be free to choose the lifestyle that they want. Zoom Towns also have the potential to lower costs for businesses as they will have the ability to trade lower salaries for allowing employees to work remotely on a permanent basis.

Could this be a silver lining in the COVID 19 cloud?

As Published on Air Doctor.