Tech Jobs, Appreciation and the rest of America
3-years ago I was en route to become a professor. Like an academic, I was planning to have the tweed coat, a library of 1,000 books, and spend 5+ years writing a dissertation that no one would read. For an academic, everything is based on numbers and research (which I will do for all of my emails). So here I present to you my dissertation on "Giant Tech - Giant Home Prices." Please take this with a grain of salt and know that a dissertation title is supposed to grab attention.
But really, let's take a deeper dive at a recent Zillow analysis that is backed by some real data points.
-The median home value in the San Francisco metro is 7% above its pre-recession peak
-The median home value in the San Jose metro is 21% above its pre-recession peak
I, like most other people in real estate, and in the world, read that and go WOW! The Bay Area real estate market is on fire! For those naysayers, just look at the September Existing Home Sales Report and compare the rest of the U.S. to the "Powerhouse" we call San Francisco/Silicon Valley:
-Existing home prices are now just 3.7% below their pre-Recession peak of $230,600 (October 2005)
Ok, so not too bad. While the rest of the country is almost at their pre-Recession peak, we are above it. And for those in San Jose, pretty far above it. But anyone could have told you that. Here is the fun stuff. Homebuyers have a laundry list of things they look for when buying a home (two-car garage, schools, master bedroom, etc.). Have you ever thought of this though - proximity to Apple/Facebook/Google employees? Probably not unless you like living around major corporate campuses. But look at this:
-In census tracts where Apple workers tend to live, home values are 34% above their pre-recession peak
-In census tracts where Google workers tend to live, home values are 29% above their pre-recession peak
Alright, so I left out that those same census tracts where Apple/Google workers tend to live are a bit more expensive then their surroundings - with the typical worker at Apple's Cupertino headquarters living in a home that is worth $1.14 million ($241,000 more than the median home in San Jose and $380,000 above the median home in the San Francisco metro area).
Just some food for thought. If you ever have any questions at all, please do not hesitate to reach out. At MinnGo, we realize that real estate is not something our clients think about everyday. Lucky for you, that is what we live and breath.
Until next time.