Technology workers are increasingly looking beyond Silicon Valley for a place to call home, eyeing cities like Seattle, Denver and Austin, Texas, as their companies open new offices across the country. And it’s impacting housing prices.
When technology workers enter a metropolitan area’s real estate market, housing prices are likely to increase, according to a recent study by real estate company Redfin.
For every 1 percent increase in technology workers, there’s roughly a half percent rise in home prices above the national rate of appreciation, the study found.
The study tracked the hiring data of the four largest Internet-related companies—Google (GOOGL), Apple (AAPL), Facebook (FB) and Amazon (AMZN)—in six metropolitan areas, including Silicon Valley. The hiring data from these companies were used as a proxy for overall technology hiring in the areas.
Seattle and Boston have the largest growth rates in technology hiring with a year-over-year increase in technology workers of 21 percent and 17 percent, respectively. As a result, Redfin believes that housing prices will increase the most in these areas.
It is important to note, however, that Boston only saw a 3 percent rise in year-over-year home price increases, despite having the second-largest uptick in technology workers. The authors attributed this discrepancy to people leaving Boston for warmer climates.
For now, Silicon Valley still holds first place for housing price inflation above the other cities surveyed at a 22.2 percent increase in year-over-year home prices.
But other cities are catching up. Denver saw an increase in home prices of approximately 17 percent, Austin 15 percent and Seattle 13 percent.
What’s driving housing prices up? Technology workers’ high salaries and their increasing wealth from stock-based pay.
Apple, Facebook and Amazon have all seen stock appreciation at or above 25 percent since last June. Google saw a 4 percent depreciation, the study noted.
Because of their growing wealth, technology workers are often the ones driving bidding wars to new, groundbreaking levels.
“We always knew at a vague level that the expansion of the technology-driven economy was affecting the American city, but now we see by how much,” said Glenn Kelman, CEO of Redfin, in the report.