US Banks 

"If you can go into a restaurant in New York City, you can come into the office."
 
That order to return to work came from Morgan Stanley chief executive James Gorman at a staff conference this week. US banks are becoming a microcosm of the world's work from home (WFH) dilemma and many are split on whether to call people back. Reporters from Bloomberg watched on Monday as Goldman Sachs staff high-fived and hugged each other as they streamed into their Manhattan HQ, following orders to return from chief executive David Solomon.

Those institutions stand in contrast to Citigroup, which won’t recall more of its staff to its mostly empty Tribeca tower in downtown Manhattan until July. JP Morgan has told all US employees to prepare to return early next month, but the tower will still be capped at 50% occupancy.

However this plays out, New York City looks to be on the road to normality. New York state lifted nearly all remaining Covid-related restrictions yesterday. Manhattan renters signed almost 10,000 new leases during May, four times the number a year earlier. With each passing week the events of the past 18 months look like less of the great reset they once appeared to be.
 
Work from anywhere 

That's not to say the move towards hybrid, more flexible work patterns won't have lasting impacts. Back in March we talked about a Simon Kuper FT column wondering whether the biggest economic winners of the last 40 years - highly skilled natives living in superstar cities - might be the biggest losers of the next era:

"Lesser-skilled workers in western countries have been through this already, when jobs in factories, call centers and back offices were offshored. Parisian graphic designers and New York bankers may be about to find out what that feels like."

New research from the Tony Blair Institute for Global Change warns that one in five jobs based in the UK could be outsourced to other countries in the wake of the pandemic. That would mean 5.9 million “anywhere” workers are at risk, of which 1.7 million are in finance, research and real estate.

For a more detailed analysis of lasting changes to work and real estate as a result of the pandemic, I recommend Knight Frank's (Y)our Space 2021 report.

US Home Purchases

Applications to purchase US homes are slowing and are now about 7% below their level in January and February 2020.

Like the UK, the US housing market in recent months has been characterized by surging prices and a shortage of available homes for sale relative to demand. Mortgage applications suggest that demand is now beginning to cool, both as buyers struggle to find the homes they want and as prospective buyers hit affordability ceilings. As Jonathan Miller of Miller Samuel notes:

"Cooling of demand is now possible because the financial engineering of the past bubble is not present. When house prices become too expensive, they can’t be purchased."