We've all heard stories or know people who have made the decision to leave the city during this pandemic, either temporarily or permanently. Some young people have moved home until things settle down and some people have sold their real estate and bought something outside of the city.

I don't know know what the exact numbers are, but you can see this trend being reflected today in downtown rental rates and other indicators. This is happening in many cities around the world.

But here's what I think about when I hear these stories:

1) Are these people assuming that we will never go back to offices and that WFH is our new reality? In this case, the thinking is simple. The world has changed. I need a proper Zoom room and a home gym.

2) Did these people never really like urban living or have they simply outgrown the city? Pre-pandemic, family formation was still a major pull away from downtowns for many. In this case, a move was going to happen regardless.

3) Or are these people taking a short-term view of the world and forgetting/ignoring that our global cities are going to rebound and that 2 hour commutes really suck? (Sitting in front of Zoom all day is also no way to live in my opinion.)

There are both positives and negatives to urban living. There are forces that make people want to centralize and there are forces that make people want to decentralize. And the reality is that many of the benefits and perks of living in a city are temporarily turned off right now.

Things are not fun right now, but this isn't going to last. I'm looking forward to the roaring twenties.

Earlier this month, Vancouver City Council approved a plan that will have staff developing a "transport pricing" strategy for the city's core. (Transport pricing is just another term for road pricing or congestion pricing.) The plan is for staff to go away and work on this and then report back to Council with a pricing strategy sometime in 2022. At that point Council will look to approve the plan and it will all get implemented by 2025. Or at least that's the plan. I remain somewhat skeptical because Vancouver certainly isn't the first Canadian city to look at pricing its roads and congestion. Toronto has tried and failed. And so if Vancouver does end up doing this, they'll likely be the first city in the country.

So why are they doing this, or least trying to do this? Well, if you're a regular reader of this blog you'll know that I've been a supporter of road pricing for many years. Lots of old posts over here. But in the case of Vancouver, their stated goals are really as follows: 1) They want to reduce congestion and encourage people to use other forms of mobility; 2) they want to reduce carbon emissions by 50% by 2030; and 3) they want another revenue stream that can be used to fund things like transit and active transport. Put differently, it's about pricing/taxing the things that we want less of and then using that money to pay for the things we want more of.

Some of you might be wondering whether this is a good idea at a time when the centralizing pull of cities is being called into question. But I think it's important to keep in mind that Vancouver thinks it needs at least five years to implement its transport pricing. We'll be living through the roaring twenties by then. I am also a firm believer that cities are going to snap back significantly faster than most people think.

I was searching around trying to find data on long-term real estate prices and I came across a paper by Tom Nicholas and Anna Scherbina called, Real Estate Prices During the Roaring Twenties and the Great Depression.

Here are some stats about Manhattan real estate (from the paper) that you all might find interesting:

- In 1930, Manhattan housed 1.5% of the US population, but had approximately 4% of all US real estate wealth.

- To construct their price indices the authors randomly collected 30 real estate transactions per month in Manhattan between 1920 and 1939. The mean price per square foot in 1929 was $6.91 (year of Black Tuesday). And the mean price per square foot in 1939 – 10 years later – was $2.29.

- Buildings containing a store at grade tended to sell at higher prices. The authors speculate that this could be because a zoning change in 1916 made it difficult to open stores in “residential” areas.

- Buildings with three, four and five storeys tended to sell at a discount. Six storeys or higher and the buildings generally had an elevator, which resulted in higher pricing.

- Manhattan real estate prices reached their highest level in Q3-1929 before falling 67% by 1932. Prices remained more or less flat during the Great Depression.

- If you bought a “typical property” in 1920, it would have retained only 56% of its value (in nominal dollars) by 1939. In fact, it took until 1960 for assessed property values in Manhattan to exceed their pre-Depression pricing.

- An investment in the stock market index during this same time period, 1920-1939, would have outperformed real estate by a factor of 5.2x.

Much of this probably seems hard to believe given the market today. Imagine waiting 40 years for the value of your property to come back.

Photo by jesse orrico on Unsplash