How Remote Work is Changing Small Town Residential Markets

For many years my family has been coming to Vermont for summer vacation.  We love the change of scenery from our urban life in San Francisco.  Every morning at about 5 am the birds begin singing outside our windows, serving as a natural alarm clock.  As they gently nudge you awake with their beautiful songs, the sun begins to rise.  Our place is located in a town called Quechee, VT, home to a long running hot air balloon festival.  It’s pretty common to hear the gentle hiss of a balloon passing overhead early in the morning.  When this happens, it’s such a beautiful sight that we usually jump out of bed and run to the deck to watch.  It’s a peaceful experience. 
 
As I dropped my kids off at summer camp this morning, my ears were automatically drawn to a different sound, that of parents chatting about how much they love working remotely and living in Vermont.  It got me thinking about this small town and how much it’s changed in the past few years.  The proximity of small New England towns like ours to big cities like Boston and New York is a big draw for would be remote workers.  We bought our modest condo here in 2012.  Having grown up in the area and having family in the residential real estate business, I knew the market had been flat for many years.  In fact, residential pricing throughout the region was not historically prone to significant swings in value.  But that all changed in 2020.  We rent our condo most of year.  Historically, renters would stay for a few nights or maybe a week at a time.  Suddenly, in 2020, we had renters seeking multi-month occupancies.  This continued through 2021.  Additionally, we began to get unsolicited offers to purchase the condo.  And these offers were 4X what we paid for it. 
 
Visiting with my sister-in-law, a residential agent in the region, I learned that the same phenomenon we’d become accustomed to in San Francisco, homes selling over asking price in a period of hours with multiple bidders, was in fact playing out here.  After 2 years of this trend, supply is extremely limited.  The presence of wealthy buyers coming from the big cities to the south, coupled with investors (including institutions) buying up single family homes as rentals, has put extreme pressure on many of the would be local buyers who live and work in the region.  Their incomes no longer support the cost of buying a home.
 
The ongoing disruption in how and where we work is having far reaching impact on many aspects of society.  Sometimes it’s hard to see the bigger picture.  Cities like San Francisco, for example, where office going population is still <40% (and much less on many days of the week), are experiencing business failures as merchants who formerly served this population struggle for survival.  In addition, city government is bracing for significant reductions in tax revenue as corporations reduce their office footprint, reducing the value of office buildings and the taxes they pay.  Not surprisingly, the office economy is a huge engine for most major cities.  At the same time, small towns are struggling with an opposite problem; an influx of urban wealth, rapidly changing the socio-economic landscape.  Those choosing to live in a city like San Francisco mostly do so knowing it will be expensive.  They come there to participate in an economy that at least provides the possibility of earning sufficient income to make it affordable.  But for the working class families that have made small towns throughout the US home for generations, this changing dynamic is not wanted.  But it’s happening.  The implications of remote work will continue to have far reaching impacts on society, disrupting not just big cities, but also small towns throughout the US.