The news that a major tech company plans to invest in your town or city is usually cause for celebration. The investment brings with it additional infrastructure, amenities and housing. Existing homeowners gleefully anticipate the increased equity in their homes. However, locals looking forward to buying or renting in their neighborhood will likely experience the opposite emotion – the pain of being squeezed out of their hometowns.
There’s no question that tech has transformed many cities for the better. According to CBRE’s latest Tech-30 report, the emergence of AI saw tech companies increase U.S. office leasing to 18% in the first three quarters of this year. Post-pandemic, returning occupants to city office spaces must be considered good. Unfortunately, high-paying tech jobs also mean that cities where Big Tech has an imprint have become unaffordable for many people. Here’s a look.
Nowhere is the housing crisis more acute than in the home of tech – where all the powerhouse tech companies – Apple, Google, Nvidia and Facebook – have their company headquarters. The median cost of housing in Silicon Valley is currently around $2M, according to Globestreet and backed by Zillow. That meant the city had to fund affordable housing projects for teachers, while many essential workers commuted long distances to work. According to an April National Association of Realtors report, in the San Jose area, you must make $468,252 – the highest of all 221 U.S. metro markets – to afford a house.
Tech companies like Amazon and Microsoft have made Seattle one of the most expensive cities to live in the U.S. and the city’s population has grown by 20% in the last decade. The Department of Housing and Urban Development ranks the Seattle metropolitan area’s housing market as the sixth most expensive in the nation.
According to the Zillow Home Value Index, the January price of a standard detached home in Seattle doubled between 2010 and 2024, from $444,000 to $926,000. A report by GeekWire showed that between 2016 and 2020, the Seattle region added 48,300 new tech jobs, driven in part by the success of local megacorporations like Amazon. These highly paid employees could afford a rent premium, displacing less competitive, working-class tenants. According to Zillow, the average cost of a home in Seattle is $850,864.
Oh, Austin! The only thing weird about the city these days is the astronomical prices. Shocking is a better word. According to a Texas Association of Realtors report, the southern home of Tesla, Apple and Google saw its house prices almost double in a decade from $189,000 in 2011 to $343,914 in 2020. As of November 2024, the median sales price for the Austin metro was $435,000, up 2.4% year-over-year, with Zillow’s average being $513,622. The median income in Austin is now $89,415 per year.
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Wherever Apple and Google go, high house prices are sure to follow. Case in point: the Raleigh, Durham-Chapel Hill triangle. According to Redfin, in November 2024, Raleigh home prices were up a mighty 14.7% compared to last year, selling for a median price of $450K. Zillow has the average home price in Chapel Hill as $612,006.
In Downtown Raleigh, Redfin’s numbers are even more staggering: Home prices were up 33.0% compared to last year, selling for a median price of $685K. Mansion Global cites a tech-fueled population gain as the reason for the city’s increase, with most buyers relocating from New York City, Boston and Washington, D.C.
According to CBS News, a recent study suggests that by 2040, the population of the south Denver corridor is expected to more than double. It forecasts 75,000 new jobs being added to the corridor in the same time period. It’s no coincidence that CBRE’s 2022 annual Tech-30 report ranked Denver among the top tech markets in North America for office rent gains over the previous two years, buoyed by the city’s growth in tech employment and tech’s share of venture capital funding. Although high interest rates and high prices (Zillow cites the average Denver home price as $547,159) have slowed the market over the last year, as of 2023, Denver homes were 120% more expensive than 10 years ago, according to the Zillow House Price index, referenced on Fox31.
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After Amazon announced in November 2018 that it would choose Arlington, VA, as its new HQ2 home, prices spiked as the tech giant announced it would ultimately create 25,000 jobs with an average salary of $150,000. A Bright MLS report in 2023 showed that prices of single-family detached homes increased by an average of 17% annually immediately after the announcement in the National Landing Market (ZIP codes 22202 in Arlington and 22305 in Alexandria), while detached home prices were up by more than 10% countrywide.
The pandemic caused the boom to stop, after which the price increase gradually resumed as Amazon worked through its hiring process. The numbers are expected to spike once all Amazon employees return to the office full-time. The average Arlington house price on Zillow is now $807,777, up 4.4% this year.
A Harvard study in June 2024 found that house prices in many of Portland’s metro areas were six to eight times the median income.
“Both homeowners and renters are struggling with high housing costs across the United States," the study said. “On the for-sale side, millions of potential homebuyers have been priced out of the market by elevated home prices and interest rates.”
Portland has been nicknamed Silicon Forest and some of the top tech companies there include Intel, Amazon, IBM, Infosys, Apple and Oracle. According to Zillow, the average price of a home in Portland is $527,584.
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Tech might make an odd bedfellow to country music, but the two sit side by side in Nashville, where companies such as Oracle and Amazon have called it home, forcing prospective homeowners to pay to the tune of $428,358, according to Zillow. Tech caused house prices to soar in Nashville – despite a recent mellowing due to interest rates – prices are still up 50% above pre-pandemic levels.
With top universities like Harvard, MIT, BU and Tufts nearby, it was inevitable that top tech companies such as Dell, HubSpot, DraftKings and GE would position themselves close by to soak up the talent. Nowhere has the effect of tech on housing been more profound than Boston, best known for its working-class neighborhoods.
“Boston is ending the year as the fourth most expensive rental market, ranking behind New York City, Jersey City and San Francisco,” Crystal Chen, a spokesperson for Zumper, a website that analyzes the nation’s rental markets, told 25News, a local Boston news station.
It’s not just rents – the median rent in Boston, according to Zillow, is an astounding $3,400/month – but house prices, which are a lofty $750,143. According to Property Shark, Boston rents increased a massive 66% in the 10 years between 2009 and 2019. The city is expected to have a median house price of $1 million by 2030. According to Boston.com, it’s not just tech and business driving up home prices in the city and surrounding areas but also high interest rates, causing potential sellers to stay put and fueling a lack of inventory.
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This article Tech Companies Are Pricing Locals Out As A New Report Shows How They Cause Housing Prices To Soar originally appeared on Benzinga.com
