I'm an electrical engineer. The ideal place for me to live, career-wise, is the Bay Area.
I don't have any desire to do so, because the cost of living so far outstrips the pay that I can command relative to other places.
It's a theoretical bubble, but the damn thing ain't popping, at least yet.
I wonder to what extent the trends that were starting pre-COVID (remote work increasing more and more) will change this?
It doesn't necessarily take much. Often these things, driven by behavior at the margins, can create large differences.
While there are undoubtedly network effects due to having people near each other, I think those are weakening due to technology and communication improvements.
One part of it, not even being true WFH, is setting up satellite offices in less expensive places. Even for jobs that can't really be done "from home", distributed teams are becoming more and more productive due to technology. Places like Boulder, CO aren't cheap. But they're a heck of a lot cheaper than Silicon Valley, they're in close proximity to an excellent engineering school (can attract graduates), and they offer many of the cultural advantages of places like California with close access to Denver. It's still a "magnet" city to much of the surrounding states, so you can draw regionally too.
By distributing some teams regionally you can reduce some of the housing pressure on places like Silicon Valley.
The other aspect is a partial-WFH scenario. Let's say I work for a company in Sunnyvale. If I have to go into the office 5 days a week, I'm going to consider my commute one of my key quality of life metrics. I'm not going to live in Scott's Valley and have to brave Hwy 17 over the hill every day. Nor am I going to live in Pleasanton and battle the 680/880 hell every day. I'd consider it not worth it, so I'd end up paying more, sacrificing quality of life in other ways (price, square footage), even though the housing markets in Scotts Valley or Pleasanton might be more to my liking.
Now imagine I WFH 3-4 days a week and only come in to the office 1-2 days a week based on a certain meeting schedule when we try to get everyone into one place... Now I might take a different look at commute vs. housing tradeoffs, because the commute doesn't happen as often. Maybe I'll live in Scotts Valley or Pleasanton, or even Gilroy because I love the smell of garlic.
Partial WFH would reduce some pressure on Bay Area housing costs because people would be more willing to live farther away from their job if they knew that they didn't have to fight that traffic every single day.
Will a change to a more remote workforce be what pops that bubble?