When it was first reported that Silicon Valley residents were thinking about moving to Seattle in droves, people immediately wanted to know if these transplants were to blame for soaring real estate costs.
The question on everyone’s mind was: Can we point the finger at Californians for Seattle’s housing boom?
New data being released today suggests that it is not only Bay Area residents, but tech workers in general that are driving costs up. In fact, for every 1 percent increase in tech hiring, there’s roughly a half-percent increase in home prices (beyond normal appreciation), according to Redfin, the Seattle-based online real estate brokerage.
Last month, it was also Redfin that reported the influx of Silicon Valley residents in Seattle. It found that 25 percent of Bay Area residents on Redfin.com were looking for homes outside of the area, with nearly half, or 12 percent of searches being conducted for Seattle.
In the data being released today, Redfin CEO Glenn Kelman evaluated hiring at Google, Apple, Facebook and Amazon using information found on LinkedIn to get a sense for how job growth was affecting home prices in various cities.
Over the past year, Redfin found that home prices in Seattle have increased 12.7 percent while technology hiring increased 21 percent. At this rate, Seattle is growing faster than any other city evaluated by Redfin, including Silicon Valley. For perspective, home prices nationally inched up only 6.5 percent while tech hiring increased by only 3 percent across the country.
While Redfin declined to discuss other factors that may be influencing prices, it backed up its thesis with anecdotal information from its agents. “If you talk to local Redfin agents in Denver, Austin, Seattle, Portland and parts of Boston, many will tell you that employees of such companies are often the ones driving bidding wars to this new, unprecedented level,” Kelman wrote.
In Seattle, Amazon and Facebook are driving much of the job growth.
Amazon employs nearly 1 percent of the entire metro area population, stretching from Everett to Tacoma, or the equivalent of the entire population of Kenmore. In Seattle proper, Amazon employs roughly 20,000. Facebook’s growth here has also been impressive. Its Seattle presence grew by 39 percent year over year, and now stands at roughly 602 employees strong.
The growth goes way beyond these big four tech giants, too.
Redfin didn’t take into account Microsoft, or the arrival of other tech companies opening up satellite offices in Seattle. Beyond Google, Apple and Facebook, other big companies include Groupon, eBay, SpaceX, Twitter and Dropbox. In fact, the list has become so long we’ve created a page where we are currently tracking more than 50 centers.
Finally, Redfin says the trend is compounded by the fact that many of these workers’ wealth is increasing from stock-based pay. Whereas U.S. household income grew around 1.8 percent in 2013, many tech workers see a large portion of their income coming from stock, which is growing at more than 15 times that rate.
Despite its analysis, Redfin doesn’t have suggestions for those who are being left out of this boom.
Kelman concludes: “It’s a kind of prosperity that will always feel like a dream, drifting across the country like never before. The only challenge will be making it work for everyone, those in technology and all the other people who live in these cities.”
To get the employee growth in each area, Redfin counted the total number of employees with an active LinkedIn profile.