January 2017 - The World's Local Bank

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TH E M R EP O RT | 9 MDWELL Home is Where the (Tech) Hiring Is I t's no state secret that tech is a leading driver of the U.S. economy. Since its rise to general availability in the 1990s, the internet has created millions of jobs and billions of dollars in wealth for Americans. But how about the housing market? How are residential real estate values affected by the presence of technology hubs, and how much do they impact the real estate economy? To find the answer, HouseCanary examined growth in residential real estate values in all 381 metropolitan statistical areas (MSAs) over the last three years, and compared it to the relative penetration of technology jobs in each MSA.* The data revealed that real estate values have (perhaps unsurprisingly) surged in cities with the greatest access to wealth created by technology jobs, measured by the number of technology jobs per 1,000 jobs in the MSA. What's fascinating, however, is the strength of the link when it comes to real estate prices and tech jobs in each metro. Cities with higher numbers of tech employees see bigger growth in property values, with the top five seeing an average of 31.2 percent three-year price change. Those cities with the smallest percentage of tech workers see flat or even declining home prices, with the bottom five averaging -1.0 percent three-year price changes. Of course, the relationship between high-paying tech jobs and real estate prices does not tell the whole story. In addition to job growth, housing supply and interest rates are top drivers of residential real estate prices. Given the observed correlation, growing cities could further con - sider incentives for tech compa- nies to open offices within their borders. The data indicates it's healthy to incubate tech compa- nies and employ local citizens— especially since real estate values hit so close to home. Average 3-year Gain in Home Values Metro Tech Employees per 1,000 3-Year Price Change San Jose-Sunnyvale-Santa Clara, CA 124.9 +34.4% Boulder, CO 66.9 +37.2% Seattle-Tacoma-Bellevue, WA 66.8 +39.4% Austin-Round Rock, TX 64.5 +28.4% Durham-Chapel Hill, NC 59.3 +16.6% Average +31.2% Metro Tech Employees per 1,000 3-Year Price Change Ocean City, NJ 4.7 -0.1% Casper, WY 7.2 -2.1% Beckley, WV 8.1 -1.5% Vineland-Bridgeton, NJ 8.3 -0.1% Midland, TX 9.4 -1.2% Average -1.0% A look at how technology jobs impact residential real estate. ∂ Top 5 Metros: Tech Jobs vs. Home-Price Appreciation ∆ Bottom 5 Metros: Tech Jobs vs. Home-Price Appreciation 25% 20% 15% 10% 5% 0% Bottom 25 Metros for Tech Jobs 7.6 % 19.3 % Top 25 Metros for Tech Jobs *Based on the Bureau of Labor Statistics' May 2015 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates. Source: +39.4% +34.4% +37.2% +16.6% +28.4% -2.1% -1.5% -0.1% -0.1% -1.2%

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