“Tech Hubs” Lead Nation in Home Value Increases
Posted By Victoria Boss Vero Beach Realtor || 25-Mar-2014
Trulia chief economist, Jeff Kolko, recently released a new analysis on the housing markets in the top ten “tech hubs” across the United States. The report shed some interesting light on the numbers for these markets and the affect that the tech industry may be having on them.
Kolko utilized Census Data in order to create a “tech score” for the hundred largest metropolitan areas across the country. Using this data, he averaged “the share of local employment in the software publishing, data processing and hosting, and Internet publishing, broadcasting, and search-portal industries.” Kolko also included each area’s share of local employees in professions such as computer programmers, software developers, and Web developers, in comparison with occupations of the rest of the area’s population.
Using these figures, the top three “tech hub” markets were found in San Jose, California; Seattle, Washington; and San Francisco, California. Austin, Texas, and Raleigh, North Carolina, were also included in the list of tech hubs.
According to Kolko, January saw the largest gain in month to month asking prices since June 2013. These asking prices went up by 1.1 percent across the nation in January. Even with wide complaints about rising cost of housing in San Francisco, the Bay Area’s year to year home prices remained consistent with the rising national average of 11.4 percent gains. The Bay Area showed only a 2.0 percentage point difference with the average of the ten largest tech hubs in the nation, which averaged 13.4 percent increases.
However, Kolko notes that this rise from the national average is less to do with the business brought in from the area technology industries and more to do tech hubs having “steeper price declines during the bust and [having] fewer homes stuck in foreclosure today- and both of those factors are driving the current price rebound.”
It can still be seen that the average home price in tech hubs is more expensive in comparison to average prices around the nation. On average, the cost of a home per square foot in the top tech areas is $242. When set in comparison to cost per square foot averages in the rest of the nation, which are around $133 per square foot, tech hub homes show an 82.0% increase in cost per square foot.
Kolko also identifies that qualifying factors for current cost per square foot numbers in relation to pre-bust per square foot costs must also be considered. Home prices in tech hubs in 1990 were 52.0% higher than the national average home price.
There are also factors of each area’s particular draws for technology companies. Most tech hubs are also locations of major research universities, technically skilled workers, computer manufacturers, and warmer climates. These factors attributed to the locations of tech hubs being more expensive even before the internet age, and there is no reason to assume this trend wouldn’t continue.
These trends show good news for the Tampa Bay area, “Florida’s high tech corridor”. The Tampa Bay area represents many of the trends noted about tech hubs. As more large companies move their head quarters to the Tampa area’s warm climate, we are likely to see these same price trends continuing here as well.