

What Happens to Home Prices When Technologists Come to Town - hariis
https://www.redfin.com/blog/2015/06/what-happens-to-home-prices-when-technologists-come-to-town.html

======
manyxcxi
If we were having a gold rush we'd be complaining about miners driving up
prices. The tech sector is no different in that regard. I like the
correlations they've drawn to the performance of individual companies, etc.
but to promote the idea that these companies are any different from any other
company in any other industry that would be going through the same growth is a
bit off target in my opinion.

What would be interesting to me though would be data along the lines of "What
is different when technologists come to town vs. [insert some other group]"

\- What does it do to supporting industries/economies?

\- Do schools start performing better?

\- Do the local municipalities fare better because of the group that is coming
in?

\- Do maker labs start springing up?

\- Does the level of poverty decrease?

That's the kind of stuff I'd be interested in learning about. I guess I'm
asking what ACTUALLY happens when technologists come to town that's different
than when doctors come to town or garbage men, etc.

~~~
mc32
Exactly the same phenomenon happens when hydro fracturing comes to town.
Except the ramp up is much faster and incurs much more disruption and,
unfortunately, so far, is far more short lived. By the time municipalities
catch up with the demand the industry goes into a bust.

Technology on the other hand brings, so far, long term prosperity to
previously declining areas. The problem I see is that municipalities want the
prosperity without the consequences. They want the tasty burger without the
cholesterol. Western economies, or rather, societies, have this strange unease
with rapid urban expansion. An unease I have not encountered so much in
Eastern economies and societies. In the east, progress is seen as generally
good, whereas the west has greater suspicion of it.

------
meesterdude
> When I bought my first house, using money earned from co-founding a software
> company, I couldn’t believe that such abstract work could be exchanged for
> something so big and tangible, hewn from forests and rocks by people
> sweating in the sun.

I've been writing software for years, and it still feels like magic. People
work 3x as hard as me and I make 3x as much as them. Many make real, physical
things; i just type away on a keyboard. With the right incantations, you can
build something that's worth millions. Just you, in your free time, creating
something that can be used by the entire world.

Always reminds me of this louie CK interview on conan:
[https://www.youtube.com/watch?v=uEY58fiSK8E](https://www.youtube.com/watch?v=uEY58fiSK8E)

~~~
stephengillie
It embarrasses me that less physical effort grants me a more valuable reward.
This probably just reflects my laborer upbringing.

I put together a few lines today that automates a 5-minute process. Across the
scope of a few thousand servers, this obviates about 6.25 _weeks_ of labor. It
really does feel magical.

~~~
xux
> It embarrasses me that less physical effort grants me a more valuable reward

Why? Just because you work hard doesn't mean you deserve more

~~~
superuser2
"If you work harder you will be more successful" is the fundamental axiom of
American conservatism. Of course I can't speak for everyone, but the primary
reason to oppose a social safety net is "those people are poor because they
aren't working hard enough." This _requires_ a belief that hard(er) work is
and should be rewarded better.

I'd say your claim is nonobvious. That the world is fundamentally fair, and
that hard work is the most important aspect of virtue, are deep ideas in
American culture and very much tied up with the American Dream (TM).

Contemporary liberals typically challenge the "world is fundamentally fair"
part, appealing to structural *-ism that makes this untrue for people other
than white men born to financially secure parents.

Few (economists, maybe) would argue that how hard you work does not influence
how much you deserve.

~~~
WalterBright
I would. For example, no matter how hard you work lifting a rock and setting
it back down again, it produces no value and so nobody is going to pay you for
it.

(Ironically, people pay to lift weights at the gym, they don't get paid to!
It's pretty darned hard work, too.)

~~~
superuser2
"Work" in this context would be your job, not things you do on your own
initiative.

------
geebee
It's still an open question as to whether this will cause San Francisco level
problems. It may turn out to be a very good thing in moderation.

I think people forget that until very recently, San Francisco was actually
rather fond of its tech industry. It was viewed as a creative, slightly
quirky, and generally positive culture that fit right in.

Tech is actually a pretty good industry to have around. Supposedly tech jobs
create wealth and, as a result, stimulate more non-tech job creation around
it. The problem isn't necessarily tech, it's too much of a good thing[1]

There's also a secondary issue, which is that pacific northwestern cities have
a middle-to-recent history of not really wanting Californians around, so you
might be getting a more negative response from Portland or Seattle to "silicon
valley moving north" than you would from Baltimore or St Louis. An
occupational poll I read recently suggests that the computer industry is still
looked on positively [2].

Overall, though? If this just means that tech is _finally_ spreading out a
bit, so that people can earn a programmer salary in SF (about 114k according
to US news best jobs) in a place where this means they can now buy a house,
raise a family, and stimulate the local economy (and perhaps an anemic housing
market), I see this as a good thing.

[1] Perhaps. There is an argument to be made that tech culture has gotten much
uglier with the amount of money that poured in. Also, we spend a lot of time
and mathematical talent getting people to click on ads now.

[2] [http://www.gallup.com/poll/156713/americans-rate-computer-
in...](http://www.gallup.com/poll/156713/americans-rate-computer-industry-
best-oil-gas-worst.aspx)

~~~
kansface
> It's still an open question as to whether this will cause San Francisco
> level problems

SF's (SV's) problem is that it refuses to build houses commensurate to the
number of people who move there. Any number of well paid jobs from any
industry would have caused the same problem. High paying (middle class) jobs
(outside of manufacturing) are not a problem.

> If this just means that tech is finally spreading out a bit

For better or worse, the exodus of tech companies out of SV could have been
prevented. The valley could have captured nearly the entire industry if it
just built more houses. Billions (likely trillions over the course of a few
decades) of dollars will not flow into the local economy.

~~~
saryant
Compare the population growth in the Houston MSA against San Francisco's: the
Houston area grew by 9.6% between between 2010 and 2014 while the SFBA grew by
5.9%.

Compare that to the two regions' 5-year housing price index (a measure of the
movement of housing prices). The Bay Area sits at 36 yet Houston at 25.
Despite faster population growth, Houston's housing prices have not risen
nearly as dramatically.

I have to imagine that can be at least partly attributed to the seemingly
limitless number of houses being built around Houston.

(This comparison would probably make more sense if we could compare CSAs
rather than MSAs but I couldn't find a breakdown of housing price trends at
that level)

~~~
shostack
Let's be honest....there are many other reasons why homes in the Bay Area are
more desirable to many compared to Texas.

It also attracts much more foreign investment due to its location.

~~~
saryant
According to the National Association of Realtors, that's actually not the
case. California attracts only slightly more international buyers than Texas.

Texas has stronger ties to Latin America and the Middle East while still
attracting a not-insignificant number of Asian buyers (Houston in particular
has very strong ties to Asia). California obviously does get the bulk of
investment from Asia.

[http://www.realtor.org/sites/default/files/2014%20Profile%20...](http://www.realtor.org/sites/default/files/2014%20Profile%20of%20International%20Home%20Buying%20Activity.pdf)

------
chiph
People in Austin are saying it's a bubble. But it isn't - a significant number
of homes are being paid for in cash. Often $10-20k over the asking price.
Those that are being financed have fairly solid support behind them (20% or
more being put down). It's not a bubble - it's supply + demand in action.

Which means that housing will be tight until the builders can catch up.
Unfortunately, Austin's roads and other infrastructure weren't designed for
this influx and are overwhelmed. The city leadership recognizes it's a
problem, but haven't been able to produce a coherent plan for solving it.
Don't move here.

~~~
dragonwriter
Bubbles are supply + demand in action, but where the demand is driven in large
part by perceived future value where the underlying fundamentals to support
that future value do not exist.

That homes are being paid for in cash doesn't indicate that there isn't a
housing bubble -- it does mean that if there is, its not likely significantly
an effect of a mortgaged-backed-securities bubble the way the pre-2009
national housing bubble was.

~~~
jsuar
The question becomes, if there is a bubble, what could make it pop? Tech jobs
leaving the area and not creating salaries that support existing house prices?

~~~
dragonwriter
> Tech jobs leaving the area and not creating salaries that support existing
> house prices?

Sure. But other things could, too -- bubble-driven overbuilding of new housing
and then having the influx of jobs _stop_ could do it, especially if updates
to shared infrastructure were deferred and the tax revenue to support them
didn't materialize because the growth stopped -- the new houses would sell at
lower prices because the new higher-paid workers they were made to appeal to
wouldn't be there, but the total infrastructure demand would be similar,
adversely affecting property desirability.

There's probably other scenarios -- and I'm not saying it _is_ a bubble or
that any particular popping scenario is likely (I don't know Austin that
well), just that the fact that purchases don't seem to be mortgage-fueled
doesn't mean that there isn't a bubble.

------
bkjelden
It's interesting to me that they didn't include Microsoft in their data.

The article itself states that Microsoft employs 100k people in the Seattle
area - more than the ~78k they show for Google, Apple, Facebook, and Amazon
combined.

------
Aloha
I work in a high tech industry, I make mobile networks go.. and I'm slowly
being priced out of Seattle (I live in Renton), my rent has gone up 20% in 2
years, and everywhere else I look is higher yet - this combined with the
rather chilly local culture, is driving me to look at moving elsewhere,
probably to a non-tech hub, like Dallas, I'd like to own a home at some point
- but I don't make that 100k a year salary, and likely never will, as the best
paid in my industry are making in the high 70's, beyond all that, I'm stuck as
a contractor, on my second 18 month term with no headcount opening in sight.

I'm a pretty decent UNIX and networks guy - but not a software developer sort
of person, its just not the way my brain is wired, so at the rate we're going,
I'm not gonna be able to afford to live here in 2 years.

------
hughdbrown
Does anyone from Denver also find that the relationship is overstated? I don't
know of any Denver offices for Apple, Facebook, or Amazon. The only Twitter or
Google offices I am aware of are in Boulder. Boulder and Denver are connected
by a single highway and the commute is bad enough to effectively separate the
two tech hubs. I don't see how anyone can claim that the 1200 employees
attributed to Google, Apple, Amazon, and Facebook (which I dispute is an
accurate number for Denver) could possibly have any measurable effect on a
city of 600K / metro area of 2.6 million.

~~~
narrowrail
While I don't live on the Front Range anymore, I did for 20 years. Denver to
Boulder is ~25 miles, and I use to make the commute in 25 minutes (not during
rush hour). It was quite common to refer to the Denver/Boulder metro area. I
know things have changed, but ~1hr commutes don't seem to me to be significant
enough to be called separate.

~~~
saryant
36 is REALLY bad these days, especially with the current construction. I live
in Boulder and when I was recently looking at jobs I made that drive to see if
I could deal with the commute.

Nope!

------
pnathan
As someone who moved to Seattle for a tech job, it's very exciting seeing the
boom. Jobs are spraying everywhere; hope and life are flowing. It is
frustrating to see the house prices go up, but the sense of change in the air
is often almost palpable. Very thrilling.

~~~
beatpanda
That's funny, because everyone I know from or in Seattle who doesn't work in
tech is talking about how it feels like their city is under attack and being
destroyed, sort of like how it feels for everyone not in tech in the Bay Area.

~~~
nmbr
Hope and life are indeed flowing here in Seattle. For some into bank accounts,
for others into dump trucks. Thrilling isn't the word I'd pick, but how could
newcomers know what's been lost? Expecting empathy from them is unreasonable.
As absurd as expecting someone to see around corners.

------
stephengillie
Seattle's traditional Capitol Hill residents are really struggling with the
tech influx, just down the hill in SLU. New bars and restaurants open daily,
rents have skyrocketed, and their arts scene is being pushed up the hill and
to the east.

~~~
eclipxe
New bars and restaurants to enjoy, what a struggle!

~~~
dasil003
The problem is a lot of people can't afford an artisanal $15 whisky sour, but
a 25-year-old single software developer bringing in $100k doesn't have to
think twice about buying three of them.

------
mrwilliamchang
Correlation is not equal to causation. The article feels like link bait to
drive more attention to redfin.com.

------
eonw
ask seattle, they are dealing with it now and many of the locals aint to
happy.

not only have housing prices gone up, traffic and crime have as well.

~~~
stephengillie
Interstate-5, a fully-featured modern interstate highway, is a modern marvel.
In the middle of the afternoon, we can travel an entire 13 miles in the span
of just 60 minutes!

~~~
eclipxe
As someone that couldn't go further than 7 miles on 101 in SV in less than an
hour...I have no pity.

~~~
Aloha
It took me an hour to go four miles a week ago, between renton, and tukwila,
please don't move here.

------
serve_yay
It's a very discouraging time to try to buy a home in Portland now. I can't
really figure out what to do about it.

~~~
eclipxe
What is the market like there?

~~~
serve_yay
Insanity. When I was out looking a few weeks back, my realtor got a call from
another realtor who had just closed on a house for $402k, which had been
listed at $365k. Lots of people getting blown out by all-cash offers. Every
house you look at, the sale history shows it was bought in 2014 for $172k and
it's on the market for $300k, a lot of that sort of thing. I looked at
basically a dilapidated shack that was $300k because it was near the New
Seasons on NE 33rd.

I waited until I had a full 20% to get in the market, turns out I should have
bought earlier because the 20% isn't going to help me now anyway given the
all-cash offers out there. From what I have heard, a lot of this is due to
foreign capital looking for a value store. But I also think this will just
continue and get worse, as people in the Bay area look at the quality of life
in Portland, compare housing prices, and conclude (rightly IMO) that the move
is a no-brainer.

~~~
timcederman
And in the future this will look totally reasonable. The full house prices you
quote are what houses in the Bay Area routinely sell for OVER list price. When
I started looking in 2012, the average sale price in my area was $900k, and
now it's $1.7m.

------
mindslight
Imagine if some of that _wealth creation_ were being _used_ for something -
even just making people financially independent so they could work less and
pursue their own interests. Instead it just goes to the banksters that print
the money.

------
beatpanda
The industry is destroying everything it touches and there is nowhere to run.

~~~
mentat
Only because we insist that everyone work 8 hours a day to eat and have a
place to live though we don't have to.

~~~
stephengillie
Being poor is just a lack of liquidity. Minimum income is opening the bank
bailout philosophy from just corporate persons, to all persons. But human
people act differently than corporate people, so maybe it will work in this
scope.

Edit: If you disagree, could you please say why? I can be dense and clueless,
but it's hard to improve if I'm ignorant.

~~~
jobjh797878
I don't disagree with what you said because it doesn't appear you said
anything of substance. Perhaps that is why people downvoted.

