June 25, 2021

The flow of white-collar workers to fringe outlying communities could reshape everything from transportation to real estate

The pandemic, and our re-emergence from it, are reshaping the economy, government and business in lasting ways. 

White collar workers are trading their expensive lives in the nation’s most densely populated areas for cheaper, greener pastures. Online real estate company Zillow Group ZG +1.18% calls it the “Great Reshuffling.”

These moves will reshape transportation, real estate and an emerging fixture of American life: the exurb.

Fringe outlying communities of major metropolitan regions were prized for their extreme privacy or more affordable housing before the pandemic, but were typically much less wealthy than the denser cities and affluent suburbs they surrounded.

The Great Reshuffling will likely make these far-flung exurbs richer and denser. The median household income across U.S. exurbs was $74,573 as of 2019, according to data from The American Communities Project. That likely ticked up over the last year as city dwellers in major job centers such as San Francisco and New York relocated to exurbs for the same or similar salaries. In 2019 the median household income in the San Francisco Bay Area was nearly $115,000 and in the New York metro area it was more than $83,000.

A shift to the exurbs started years before the pandemic hit, according to data from the Brookings Institution, and the population of these more-remote places continued to swell with more white-collar workers even as the pandemic weakened. Why? These regions allow employees to be within commuting distance of cities as many firms ask workers to be back in the office for at least part of the work week.

U.S. Postal Service data showed that between March and November of last year, 72% of those who filed for address changes in the Bay Area only moved as far as another Bay Area county.

The money stockpiled from leaving pricier areas, coupled with stimulus checks and enforced saving over the last year, are padding the bank accounts of these new movers. Rising credit scores are, in turn, enabling other major purchases such as cars. The new arrivals in the exurbs are finding they need their first or second automobile now that they are located in a more remote part of a metropolitan area. A January survey conducted by Engine Insights on behalf of Xperi DTS found 55% of millennials surveyed said car ownership was more important than ever.

The trend toward car ownership could very well outlast the pandemic as exurbs sprawl. Less public transportation outside of major metro areas means that even without a work commute people will continue to need a personal vehicle for daily activities like going grocery shopping or to the gym, said Deutsche Bank analyst Chris Woronka.

As new residents settle down with their bigger homes, cars and savings accounts, they are bound to cause a shake up.

– Laura Forman