While some of my columns are global in nature, this one is focused primarily on the U.S. even though many of these trends may be applicable to other areas of the world.

I first wrote about deurbanization in February of last year, when we all were just starting to imagine an end in sight for the pandemic. We observed the tremendous opportunity for employees to move, given the lenient work-from-home and work-anywhere business models companies adopted out of desperation.

Freed from commuting requirements (and with stock market gains in their pockets and housing market gains just waiting to be realized), millions of people were empowered to move and log in to work remotely. A few moved into cities. Far more moved to escape them. Hardly any will be moving back to them.

Prior to the pandemic, 17% of U.S. employees worked remotely full time. During the pandemic, that figure increased to 44%. The number won’t stay that high, but I believe it won’t drop much below 30% moving forward in our new normal, nearly doubling the previous rate.

Many people thought deurbanization was temporary, just a wild pendulum swing that would right itself on the rebound. While I have no doubt it will rebound slightly or at least slow down, the die has been cast and certain trends and impacts won’t be reversed.

As we discussed early last year, deurbanization had the incredibly positive potential of “stirring the pot” from a sociological perspective. Cultures, viewpoints, and resources would flow along with these urban transplants. The former urbanites, in turn, would gain perspectives and sensitivities, along with a 20-point reduction in their blood pressure and 30% larger floor plans.

Before we explore whether that might be happening, let’s look closer at the relocation data.

Who’s moving?

According to a Redfin report, San Francisco, Los Angeles, New York, Seattle, and Washington, D.C. were the top metro areas homebuyers chose to leave in January 2022, which was unchanged from the fourth quarter of 2021. That’s based on the net outflow, a measure of how many more Redfin.com home searchers looked to leave a city than move into it.

An analysis of U.S. Census data clearly indicates that remote work opportunities are pulling people out of the downtown areas specifically. We should point out that the relative decline in population in the central urban areas is not completely due to relocation decisions. Declining birth rates in those areas and the slowing of immigration overall are limiting the kind of natural growth big cities historically have experienced.

Why are they moving?

Motivations are pretty apparent when you consider that each of those five urban centers ranks among the 15 most expensive places to live in the U.S. And four out of the five (Seattle was the exception) rank in the top 10 for worst traffic congestion.

Also, according to a fascinating survey from Move.com, finances, career, and personal/family considerations were among the primary reasons urbanites cited for their recent move, but “politics” and “culture” were commonly mentioned as secondary factors influencing their destination decisions.

For those hoping to “stir the pot” and break down polarization, that’s a bad sign. People tend to be drawn to their tribes and corresponding comfort.

Where are they moving to?

Still, even with an increasingly mobile society, people aren’t moving terribly far to save money, avoid traffic, and advance their careers. The Move.com survey found that only 20% of moves in 2021 were to a different state, 43% were within the same city, and 48% were less than 100 miles away.

But with regard to the more adventurous relocators, data from the Move.org survey hints that four cold-weather states are clearly net population losers. Oregon, Pennsylvania, New Jersey, and Illinois – were among the Top Ten states in terms of people leaving but they were outside of the Top Ten in terms of people moving in. Only three states that could be considered “cold weather” states were among the Top 10 for people moving in – Colorado (#5), Washington (#8), and New York (#9).

Ten Predictions for the Future

What do all of these trends add up to and how will this affect our future?

1. The decline of the Northeast will continue

States in that region will need to continue to reinvent themselves to compete for residents.

2. There’ll be continued rapid business growth in the South and West and especially in the Southwest

Major manufacturers especially will shift to these regions to be closer to markets and employees. Their materials and parts suppliers will follow close behind since supply chains in the future will be shorter (a topic to be addressed in a future column) and U.S. companies will choose to work not only with U.S.-based suppliers but those within their region. Blue-collar jobs follow employees and employees follow blue-collar jobs. The cycle will ratchet up.

3. Politics will be homogenized…to a point

Most political maps show Democratic concentrations in urbanized locations and Republican majorities in most rural and ex-urban areas. The outmigration of urbanites won’t be sufficient to turn many districts from blue to red, but political concentrations will be reduced. A politician representing a 55– 45 district will need to take a different approach than if the district had a 65-35 voter split.

4. There’ll be a resurgence in regional train travel

Passenger trains will make a comeback across the country and citizens of midsized cities that haven’t seen a passenger train or the inside of a train station in decades will have this option once more.

5. Big cities will embrace tourists

There will be no more ridiculing of people “looking at the tall buildings.” Given the declining populations and diminishing corporate presence, a city’s cultural and event offerings will be more important economic engines than ever before. Folks may not want to live there, but they’ll take a weekend in the Big City to see some shows, watch a professional sporting event, and enjoy some fine dining before slipping out of the city once more to go back home.

6. Cities will struggle to serve those that can’t escape

Not everyone is mobile or can work remotely. Those left behind in the downtowns will struggle as tax bases and services dwindle.

7. We’ll hear more about filtering

As urbanization shifts to counter-urbanization, the gentrification of inner cities will reverse as well, leading to filtering – the transition of existing higher-end housing stock to lower-income properties.

8. Birth rates and family size will increase

With better access to family-suitable housing, more couples will choose to form families. Many couples that find themselves surrounded by other families will join the club!

9. News and sports coverage will become less coastal-focused

Enough said.

10. Wildfires and hurricanes will take larger human tolls

Every region has its own categories of natural disasters and weather-related risks. But with more people living in the west and south, additional people and developments will be in the path of wildfires and coastal hurricanes, respectively.

The pandemic was a turning point in our history. Its repercussions caused seismic shifts in our society and sent us down some new paths while accelerating other trends already underway.

There’s no reason to think that deurbanization won’t continue, even if at a slower pace for the near term. Eventually, the pendulum will swing back and urban centers will begin to thrive, but the isolation of Covid is still firmly implanted in our memories.

Deurbanization doesn’t necessarily mean the actual population number declines. After all, New York City and San Francisco aren’t shrinking in raw population numbers but few would argue that it’s far more common to hear about people leaving those cities behind. In fact, though, many major cities are facing an actual declining population, including many in the Northeast and Midwest, like Chicago.

These trends will impact and influence our future for years to come.

It won’t be long until we see major breakthroughs in the number of autonomous vehicles (AVs) on our roadways – both for on-demand passenger travel as well as for product delivery. AV technology is improving quickly, and it appears that the bigger inhibitor to more widespread use is the uncomfortable, vulnerable feeling of being driven by a pilotless machine.

Fortunately, AV safety evaluations seem to be held to a standard of zero incidents and accidents when the alternative for human-operated vehicles “allows” for thousands of accidents and fatalities due to human error, distraction, impairment, and more. In fact, 94% of serious vehicle crashes are caused by human error.

I haven’t seen the final numbers yet for 2021, but traffic fatalities were on track last year to exceed 40,000 in the U.S., which would be the highest level in many years. We’re moving in the wrong direction on that front.

But yet, when there’s an autonomous vehicle-related accident or even an unfortunate fatality, suddenly AV technology is once again suspect in the eyes of regulators, the media, and the public. Far more often than not, accidents involving AVs are not the vehicle’s fault.

Keep in mind, that air travel is still the safest form of transportation.

Eventually, though, we’ll all become far more confident in these vehicles, just as we did with the airlines, and move past that unreasonable threshold of perfect AV safety in all circumstances. We’ll embrace this opportunity for a significant improvement in road safety overall, and as more AVs fill our roadways, society’s focus on car ownership will shift even further to an AV-enhanced, shared car lifestyle.

When we reach that tipping point in the U.S., there will be far-ranging changes in many areas of our lives, including one area few people have given much thought to – the real estate industry.

Nine Forms of Impact

Here are a few thoughts on how autonomous transportation will impact the residential and commercial real estate industry in the future. Undoubtedly there will be more in the future.

1. Property Values Adjacent to Roads

Currently, residential property values plummet as the location gets closer and closer to major roads and especially interstates. The roar of trucks and gas guzzlers is too much for most people to live with or alongside. But AVs are electric, and electric is quiet. As gas and diesel-powered vehicles dwindle, more people will be fine with living closer to highways. Developers will recognize the opportunity and build far more communities in the current high noise zones adjacent to highways.

2. Garage-less Homes

As people shift to an AV car-sharing lifestyle, they’ll have less need for garages. Some people will turn their garages into spare bedrooms, offices, Airbnb rentals, workshops, or massive storage spaces. New homes won’t be designed around garages, as so many are today – and street views of homes will be all the better for it! In fact, new home footprints will be smaller, and most houses will fit comfortably on smaller plots.

3. Portico Circular Driveways

While we won’t need garages, we will need driveways – most likely a functional circular driveway with the front door at the midpoint under a weather-shielding portico. Home properties will be landscaped in this way so that shared AVs can proceed to the doorway, load and unload passengers, and then continue to the street.

4. Standardized Delivery Boxes

This small but important home feature will accommodate and secure the increasing number of deliveries we receive and the many more that will be delivered soon by AV-delivery vehicles. A number of key retailers will collaborate to develop a standardized delivery box, similar to a mailbox but larger, to accommodate a variety of autonomous delivery service providers so they can securely deposit packages and other items at the home. Existing homes will be retrofitted with this feature, and it will be standard in all new homes. Some new homes may even be designed with a delivery dock or a one-way delivery door into the house.

5. Reduced Emphasis on Proximity

Since automated, shared driving and delivery from point A to point B will involve far less human involvement, home buyers will think less about “Location, Location, Location” and more about “Time, Time, Time.” Consideration about distances to shops and amenities will be overtaken by how we utilize our time along the way. Autonomous vehicles with built-in games and other forms of entertainment will be in huge demand to distract us from the time and distance we’re traveling.

6. Parking Lots will Disappear

Some of the space currently reserved for parking will be used as a staging area for shared AVs. Space devoted to massive surface parking areas and standalone parking garages will be put to better use for parks and new developments. New urban office buildings will need only one level for personal and shared AVs rather than the multi-level parking garages we see today.

7. Car Sales and Maintenance Moves to B2B

Currently, over 10% of retail space is dedicated to the auto industry – from showrooms and brake shops to car washes and gas stations. But as AV fleet ownership consolidates, there will be fewer and fewer customer-facing car businesses. Fleet owners will purchase their autonomous vehicles in bulk, directly from manufacturers and there will be little need for the multitude of new and used car lots we see today. Similarly, auto repair will shift from consumer-focused to in-house maintenance shops by fleet-owning companies. This all means that a lot of valuable land will be available to repurpose for commercial/residential development, entertainment, and recreation.

8. Redesign of Entry-Exit for Public Spaces

Similar to how new home landscaping will accommodate circular driveways, the street-facing layout of public buildings will be designed to resemble a hotel-like, off-street, drive-up/drop-off configuration. Automated systems will manage the flow of AVs coming and going from all high traffic arrival-departure areas.

9. City Expansion

As more people move into cities, cities themself will begin to grow their footprint exponentially, as people pay less and less attention to proximity to goods, culture, and services. Since AVs reduce human involvement and traffic congestion, people will feel liberated to venture further from core city centers to the wide-open spaces of suburbia and beyond.

However, as I mentioned earlier, travel time and how engaged we are along the way, not distance, will be our primary concern when choosing a location. The shared AV option will be affected by the time it takes to free up an AV to travel to the rider’s destination and bring them back again. Since it’s currently more challenging to get a Lyft or Uber ride in the suburbs than in the central city, it will be interesting to see how autonomous vehicles change our urban vs. rural perceptions.

We should remember, too, that shared AVs will not be our only source of transportation. Mass transit AV buses and subways will still be an important element and option. However, these networks will become far less convenient and less cost-differentiated over time and may disappear altogether.

Shared AV-based transportation will be a boon to our cities and society overall. They will not only increase safety but also reduce congestion thanks to improved, sensor-enhanced traffic flow. And maybe just as important, but less obvious, our new lifestyles shaped around convenient shared AV access will allow us to make far better use of valuable land in our cities and suburbs.

We’re starting to see metaverse real estate companies and developers coming out of the meta-woodwork, but everyone seems to have that lingering question in the back of their mind: Is this a good investment? And how much will it be worth ten years from now?

Before we get to those questions, let’s learn a little more about this buying opportunity.

Where is the Property?

Since there’s no single, unifying metaverse yet, there are multiple parallel virtual worlds, each with their own NFT parcels of land under development and ready for sale. The Sandbox and Decentraland are the primary two at this time. In these spaces and others, investment firms are buying up chunks of property and parceling it out for residential or commercial development. Transactions, of course, are made using the preferred cryptocurrency of that platform.

The real estate markets in these worlds function pretty much the same as in the physical world. Space can be owner-occupied or leased. Owners can improve their parcel with structures and features. We have zoning (and presumably neighborhood associations), along with retailer covenants and restrictions.

Metaverse real estate is currently a rich person’s game, but increasingly developers will democratize the movement and cater to average folks by offering micro-parcels because they need shoppers and concertgoers to hang out in this world.

The Economics

Here’s where things get sticky though. As one metaverse expert points out, the issue of scarcity doesn’t exist when it comes to land on the metaverse. Virtual worlds can be unlimited in size, Louis B. Rosenberg explains, since the world can be expanded and have multiple layers – that means potentially multiple buildings on the same plot of land with different owners.

As any Econ 101 student knows, price is set by supply and demand, so how can a metaverse property price be established when supply is unlimited?

How is Meta Land Valued?

In spite of those shaky economics, metaverse parcel purchases totaled roughly $500 million in 2021, and some say that amount will double in 2022. I think it will triple at least, given that new platforms keep popping up and celebrities are helping fuel the craze.

Supply and demand aside, it’s commonly accepted that real estate value – including the land and structural improvements – is a function of location, size, and utility/usability.

The first two seem applicable in the metaverse, although old habits are hard to break when it comes to location. Living next to a celebrity or a high-rent shopping district will strictly be for bragging rights since getting to the shopping center from any location in the metaverse takes the same amount of time.

And while it’s tempting to say that utility won’t be an important pricing factor since we won’t actually be visiting it in person, our avatars will be plodding around in virtual homes and hosting virtual dinner parties. And our avatars will want to shop at only the trendiest virtual shopping areas and attend shows at breathtaking virtual venues.

Thus, property values in the metaverse will reflect all three of those pricing elements, plus one additional one. Just like in the physical world, and maybe even more so in the metaverse, re-salability will be critical. Property turnover will likely be faster and more frequent in the metaverse since deeds are recorded in the blockchain as NFTs and quite easy to transfer.

So, while we will see metaverse real estate agents, we probably won’t see title companies.

The BIG RISK

Market fluctuations in the metaverse are to be expected, just as with cryptocurrencies and nearly any other asset. But the biggest risk with metaverse real estate is that the specific platform you’ve invested in fails completely.

After all, I see us eventually zeroing on one capital-M Metaverse. Right now, though, there are many, and even if we settle on two or three, that still means more will go by the wayside than will survive. These platforms will go blank along with all the property and assets.

Even in the worst real estate cycles in the physical world, it’s hard to imagine a parcel of property that loses all of its value forever. The equivalent situation would be if a beachfront property sunk into the permanent ocean bed or if the Earth were destroyed along with all possible investors.

Who’s Going to Buy?

I can see four types of people who will buy a parcel of property in the metaverse, whether for residential or commercial development.

Advocates

These are the true believers in the metaverse who are ready to build their personal space or their company because it’s where they want to be, and it’s where they believe most everyone else will be too. They live through their avatars and want them to be comfortable and successful.

Marketers

These brand owners want to market and sell their NFTs and other virtual goods or services. They also see the opportunity to strategically place their ads on the sides of buildings and popup billboards.

Hobbyists

Just like gaming is an addictive element of the metaverse, so too will be real estate investing. Buying, swapping, improving, bragging, one-upping … to these metaverse real estate enthusiasts, it’s a game of its own kind.

Speculators

I divide this group into three subgroups. The first is the cynical devotees of the “greater fool theory,” which holds that an investor is willing to pay “X” for an item as long as they’re convinced they’ll be able to sell it for “X+1” to the next person. Second, speculators also include less nefarious long-term investors looking for an alternative bull market option. Finally, other speculators are “fix and flippers” who are skilled at purchasing properties, furbishing them inside and out, and then reselling them to advocates, marketers, and hobbyists who aren’t quite as adept in this space and want a move-in ready property.

Final Word

I’m a futurist, not an investment coach. So please don’t take investment advice from me. Period.

Having said that, and again speaking as a futurist, we’re nearing a tipping point. I think there’s a very good chance the metaverse will be around for a long time and that over time, it will mimic nearly all the good and bad elements of our physical world.

That’s true for real estate in the metaverse too. There will be fluctuations and even bubbles. Ten years from now, any investor’s property might be worth 0 or else 100X what they bought it for. You might be the former, you might be the latter.

New metaverse platforms will emerge and many more will die away, along with all of their meta mansions, shopping centers, and convention centers. But the metaverse real estate market overall will consolidate and survive over time and property owners can too if they can avoid all those nasty pitfalls along the way.