6 Regions Where Tech Jobs Boom the Housing Is Scary Expensive
Across the country, home buyers are experiencing the effects of last decade’s housing crash, as builders in many places hesitantly return to new construction. Supplies have improved in 21 of the 100 largest markets, but experts believe it will be six months to a year before many other areas begin to see improvement.
Here are six regions where the growth of new construction is so painfully slow it simply doesn't keep up with the demand. People in these areas are struggling because the housing shortage has been made worse by a very healthy tech economy. All of these regions could be in danger of losing large numbers of longtime residents, and in some cases already have.
1. San Francisco Bay area
The crisis in the Bay Area has reached such epic proportions, the Obama Administration has even called for more housing there. The large number of tech headquarters in the area has created a population boom that has added to an already bustling region. The city at the center of it all, San Francisco, consistently ranks atop lists of cities with the highest-paying salaries, which has driven housing prices up. Only 11 percent of households in the San Francisco area can afford houses in the city, creating a serious problem for the majority of people who don’t work for tech companies.
One of the odder developments in this ongoing drama is the city’s recent and slightly bizarre exploration of annexing the small town of Brisbane just to its south. That town planned on approving a massive commercial development that would not feature any housing. San Francisco city officials weren’t happy because the city would probably be forced to provide most of the housing for workers in the new development. Top officials wanted to explore somehow taking over the small town. Cooler heads prevailed and now Brisbane and San Francisco are working on a compromise that will feature housing. It shows just how big of an issue housing supply has become.
Meanwhile, the ongoing San Francisco exodus has resulted in migrations of top tech talent to Portland, Seattle, Austin, Los Angeles and dozens of other tech hubs all over the country, not to mention Oakland and other cities in the East Bay.
2. New York metropolitan area
Like many areas with housing shortages, New York City is seeing increasing rent prices. Although the Big Apple has always had a high cost of living, residents are drawn there due to its world famous 24-hour lifestyle, economic opportunities and availability of high-level, specialized jobs. A large number of wealthy individuals from all over the world have moved their money into real estate, especially in Manhattan, driving up costs for whatever is left.
The city has also become a serious contender in tech in the last several years, thanks in large part to growing industries like FinTech and FashionTech. As perhaps the world’s leading financial center, New York is a hub for venture capital and the startup founders seeking it. All of this only compounds the existing problem with high rents in the city, because tech workers earn the salaries to afford the fewer units that are available in the most desirable areas.
This area of Texas was described as overheated in a recent survey. Dallas-Plano-Irving was accused of being one of the worst housing markets in the country because of rising costs, a shortage of properties, and the area’s overall economic conditions. The low price of oil has contributed to a struggling energy economy in parts the Lone Star State, with more than 30 energy company bankruptcies in recent years. The sad fact is fewer people can afford somewhere to live in Dallas and surrounding cities.
The success of the state’s technology sector has contributed to this situation as well. When it comes to tech jobs, the Dallas Metroplex is fifth in the country, with even more jobs added last year. While this has helped improve the area’s overall economic outlook, it hasn’t helped with the housing crunch, as workers have come along and snapped up new homes, leaving prices higher.
4. Atlanta metropolitan area
One study ranked Atlanta’s housing shortage as worst in the country, with inventory well below normal levels. Tech sector growth in the area has been one of the driving forces as it continues to recover from the recession, but homes are still within an affordable range for big cities. Those prices are on the rise, though, with many of the new developments in the city qualifying as “luxury.” This may be affordable to tech workers choosing to relocate to the area, but it brings bad news to Atlanta-area residents who make average salaries in non-tech areas.
5. South Florida
Nearly 40 percent of working households in the Miami area devote at least half of their monthly income to housing. This, combined with an affordable housing shortage in the area, has made it difficult for lower-to-middle-income residents to find housing. South Florida has turned to tech as an answer to its employment woes, working to attract more tech jobs to the area, which it is hoped will benefit the local economy.
Like Silicon Valley, the Seattle area is drawing tech companies and their workers, creating a demand for housing. Unfortunately, the existing shortage of housing in the area means that many new arrivals face similar problems to what they’d find in San Francisco. Condo prices in Seattle have already shot up 21 percent this year due to the influx of tech workers. This trend is only expected to increase, partly because the area’s housing prices are still lower than what you’d find in Silicon Valley.
While homebuilders nationwide are rushing to fulfill demand, those who are thinking about selling their homes often wait because they realize that if they sell they won’t be able to find anything affordable in their city, if they want to stay. Gradually, the national housing inventory is improving in many areas, but that’s complicated by the rise in technology jobs around the country. As companies pick certain cities for their headquarters or other offices, it brings an influx of tech workers who can handle the increased housing prices. That leaves thousands of non-tech residents behind in the search for an affordable place to live.