Paul Cheshire Interview: A Look Into The Future Of The Housing Market And The Post Pandemic World

London School of Economics Emeritus Professor of Economic Geography, Paul Cheshire shares his predictions about the future of the post-pandemic world. He tells Karen Jang whether you should use the opportunity now to buy a big house outside the city or the smaller flat closer to your city workplace, as more work evolves remotely.

London School of Economics Emeritus Professor of Economic Geography, Paul Cheshire

Highlights

► Paul Cheshire predicts a sharp drop in housing prices
► Cheshire: the future of work will “evolve” but not be transformed
► Cheshire: people will tend to work fewer days in the office

 

In the middle of rural France, Paul Cheshire, the Emeritus Professor of Economic Geography at The London School of Economics, works from home after experiencing the lockdown there by complete accident. “We arrived here on the evening of 13th March having not looked at the news for a few days to find Macron on TV confining everyone to their houses sine die,” he recalled.”If we had turned around immediately and tried hard, we could have probably got back to London, but we did not try that hard. In fact, it is much nicer and easier here than it would have been in London,” Cheshire told me.

For an elected Fellow of the Academy of Social Sciences and a Weimer Fellow, working remotely was a part of his life since long before the COVID-19 pandemic began.“People have a significant history of remote working but typically, as just a part of their work. As an academic, I have done most of my writing at home ever since. My guess is, most academics do,” he explained. “I have always come home working for things that require focus and concentration, like writing, but gone to the office to meet with students, teach and interact in research seminars or with research teams and colleagues,” he said. 

“With good internet, working remotely is ideal for writing. It can be virtually in the library or on the workstation,” Cheshire said.

In a picturesque, French countryside, it is much easier to social distance and exercise. “I have been digging and planting a vegetable patch,” he said, “and plenty of good food to be had!” He added with a smile, “several of the local producers I have got to know over the years at the local market are very keen to sell to me when I visit on my bicycle.”

As we sat down for an interview, I saw in front of me a stream with steep wooded banks cascading down a valley with two quite big blocks of wood. In the foreground, there was an area of grass with trees and a picturesque but a bit of a tumbledown barn. Flankled to his right was a high hedge where many birds settled as nesting places and some fig trees. If he looked out the other way, he would see a distant view of the Pyrenees on a clear day and down the valley to a village about 1.5 km away with a church spire and hills beyond.

“In big, dense cities like NY or London, there is still a real fear of COVID. Their reliance on mass transit reinforces the fear. Over time and more quickly if we get a vaccine, people will adjust and the fear will evaporate,” he said with hopeful expectations. “Of course in lockdown, that was very different,” he said. “My son,” he continued, “who is in London, says it has been extraordinarily quiet with no one about until very recently.”

In New York City, the normally high-spirited city also became bare as city dwellers fled to other parts of the US to escape the epicenter of the coronavirus in the country. In Times Square, billboards continued to flash with pigeons being the only remaining nonchalant spectators meandering the streets. All the Elmo’s and Iron Man mascots were gone, along with the yellow taxis, and occasionally, you could hear the trots of horses carrying police officers who patrol the streets. Despite the still serenity, the war continued inside the apartment buildings, nursing homes, and hospitals, where patients sweat in bed, caught in the throes of the invisible virus.

 “After the COVID-19 crisis, will city life revert back to the way it was? What do you think this pandemic’s effects on housing and transportation would be?” I asked Professor Cheshire. 

“People will tend to avoid the dense central city. In the short term, a lot of the things that make NYC a great place to live: the buzz, theater, and music, spectator events, restaurants, libraries, or clubs will suffer hugely. Many will close, especially restaurants and theatres, so even when fear is over, it will take several years to bounce back,” he shared his predictions for the aftermath of the pandemic. 

These days people are hesitant about using mass transit and it's unclear how people will adapt to other types of transportation. In New York City, very few people own cars. Taking the subway or a yellow taxi is much faster and less stressful than finding street parking and being stuck in aggressive traffic with the Ubers and taxis. 

But for Paul Cheshire, “commuting has not been a problem. I have ensured that I always have lived close enough to work to cycle in less than half an hour. I find that it saves both the time overall and saves time in the gym. Moreover, I find cycling relaxing, so ideas often bubble up as I cycle along.” 

Move Away From The City

The shift to moving away from the city is likely to escalate in this NYC metropolitan area as well due to COVID-19. As remote working becomes incorporated into the acceptable and preferred lifestyle of many workplaces, many people want to live in bigger suburban homes away from the city.  “How will the global economic recession caused by COVID-19 affect where people choose and can afford to live?” I asked him, thinking about friends’ families potentially moving out of NYC. 

“In the longer term, there is likely to be an increasing demand for larger houses further out relative to near suburbs, but also an increase in demand for very small living spaces in central London. Or Manchester or Edinburgh come to that,” he expanded. 

Photo credit: AdobeStock.com Cheshire predicts a sharp drop in housing prices, given that housing supply is “extraordinarily inelastic” and demand for housing is largely determined and influenced by incomes.  

“In the short term, there has been a more serious fall in income than ever since 1930.  For many people, savings have been eaten up so their ability to find a deposit for a loan to buy for the first time or trade-up has been impaired. This will produce a sharp fall in demand, so in house prices. Supply being so inelastic does not just cause prices to be higher (around twice the cost per sq ft as NYC) but more volatile. So a sharp drop,” he said. 

Life Choices

The positive effects of remote working depend on where people will choose to live after COVID-19. In both scenarios, remote working would result in less frequent commuting, thereby reducing the effects of car pollutants on the environment, whether one works from home or moves to tiny living spaces in central cities and commutes less often. Another benefit of moving to smaller areas by your workplace is the new capability to cycle or walk to work. However, people who live in larger houses away from the city will also use more energy and compensate for the positive effects of commuting less on the environment.

“People moving yet further from city downtowns and living in larger, detached houses will tend to use more energy. But, as long as some move to second, very small living spaces in central cities and commute less often, there will be an energy-saving. Moreover, modern offices tend to be more energy-efficient than homes so again a loss of energy efficiency,” he said.

Empty conference room overlooking city By Tom Merton/KOTO (AdobeStock.com) “A big green gain would be the substitution of remote business and political or government meetings, for air travel,” Cheshire added, explaining a possible benefit on the environment.

The substitution of in-person meetings by politicians would reduce emissions of gases such as carbon dioxide from planes, thus decreasing aviation environmental pollution. Prince Harry and Princess Meghan were criticized for taking a private jet to attend a summit on climate change last year. While pictures of politicians, such as Kim Jong Un and President Trump, end up on the front covers of the newspaper, these meetings might take place virtually in this new post-pandemic world. Consequently, privacy becomes a further concern in this era of technology that the world was forced to embrace.

According to Cheshire, the more substantial and permanent change is likely to be business travel. “Face to face business meetings are very expensive in both time and cost, and over the past six months, people have learned to organize and acclimatize to remote meetings. Technology has improved immensely. There is a saving available from the COVID experience that is likely to be long term affecting travel, hotels, restaurants, and conference centers. And remote meeting technology and dedicated facilities will get better,” he said.

Did COVID Have To Happen For Remote Work to Become the Mainstream?

There was a powerful push from COVID-19 into remote working. According to Cheshire, the pandemic was like a transit breakdown, when a subway line stops working temporarily. “Commuters find alternative routes, and some find they prefer them or they work better,” he said.

In addition to the strong push, technology has enabled remote working to become a reality. For example, in 1980, futurologist Alvin Toffler was talking about the ‘tele-cottage.’ However, according to Cheshire, the other big difference between now and then is the fast and ubiquitous internet.

I asked him if remote working will become the new future of work.

According to Cheshire, the future of work would “evolve” but not be transformed. “There are excellent reasons why people work face to face, and those will continue. But the pressure to work from home resulting from COVID will have induced people to make adjustments, learn new technologies.”

Photo: Jacob Lund ( AdobeStock.com)

According to Cheshire, remote working is less productive and less enjoyable than face to face interaction. For him, the question with remote working is “how far will we revert?” 

 “One of the big benefits, both in terms of enjoyment of the university experience and in terms of lifelong earnings, is the interaction with one’s peers and the contacts and networks students build-up that often lasts a lifetime,” Cheshire said. “In the longer term, I think it will partially re-establish itself both because of the agglomeration economies of big, dense cities and the need for social interaction. Some important highly value-added activities require large numbers of people and face-to-face interaction with co-workers or spectators or audiences. Broadway, high-level sports and high-level concerts require large markets (so big cities) and large audiences (so large dense cities) and demand is likely to continue to grow for that type of activity and interaction,” he replied.

The entertainment and art industry will surely grow as people seek out social interactions once they can do so.

Look into the Future 

What does our future look like as we move ahead and out of the pandemic? 

“I think people will tend to work fewer days in the office and live further out in larger houses with more space, so it is easier to get a workspace at home,” Cheshire told me. 

“There could also be an increase in the demand for decentralized workspaces in suburban or rural locations to which people would drive or cycle to get better internet,” he added.

“What would be some benefits to commuting to and working in these decentralized workspaces?” I asked him.

“Better remote conference facilities, better workstations, and get away from the children!” He replied. “In London, there are already dedicated, very high quality remote conferencing locations.”

 In addition to these decentralized workspaces in suburban or rural locations, Cheshire predicts that there could also be a concomitant increase in the demand for very small, central living spaces. In these smaller homes, workers may ‘camp out’ for maybe two nights a week and take a cab, cycle or walk to work.

“That would imply an increase in two home owning and some more population in the central city,” he said of having decentralized workspaces.

Photo: Saty Bhat ( AdobeStock.com0However, according to Cheshire, cities are the greatest human innovation ever –not just for economic productivity but for consumption, enjoyment, and welfare. His statement reflects the sentiment of most city-dwellers who would continue to live in the city, despite this crisis. One of the irreplaceable parts of city-life is the culture.

He predicts that humans would likely “revert to in-person gatherings and live in cities after the pandemic runs its course” because of the inertia of cities and that of human nature.

Referring to the “inertia of cities,” Cheshire said that cities carry on “even after catastrophic events such as the Great Fire of London or the Tokyo firestorm and revert to their previous structure patterns of land use and working more or less.” 

“The other inertia is human nature: we are social animals who tend to work best in groups and get upset without our groups. Workmates may be our tribes,” he continued, thinking back to his colleagues at the London School of Economics, and friends.

While the future is unclear, embrace the benefits of remote working, the incorporation of online tools, the establishment of the era of technology, and the accessibility to education, while continuing to fight for and remember the social interactions and vulnerable emotions that makes all of us so complicatedly human.

The coronavirus is part of our personal and collective histories, and we will move forward with all of its legacy in our pandemic narrative.

As the brand new world evolves before our eyes, would it be wise to buy a house during the COVID-19 recession? Cheshire’s final piece of advice is “unless you think you can double guess where the housing market is going and want to take a punt on change, probably best to wait a bit and see how life settles down after the immediate fears and peaks of the pandemic have settled.”

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