A very different kind of refugee crisis may drive Seattle home prices even higher in 2016. Zillow senior economist Aaron Terraza anticipates an influx of “Silicon refugees,” that is, tech workers relocating to Seattle because of the high cost of living in the Bay Area.
Terraza shared these insights at the Economic Development Council (EDC) of Seattle and King County, according to KPLU.
“The Googler in Mountain View has to pay roughly about $1.1 million for a home in the typical neighborhood where these people live,” he said. “By contrast, in Kirkland, it’s about $500,000. Salaries don’t vary nearly that much.”
In fact, a number of very large Silicon Valley tech companies are capitalizing on this disparity in housing costs between the two regions, one of the reasons why companies such as Dropbox, Twitter, Salesforce.com, Uber and Facebook are establishing fast-growing engineering centers in Seattle. (See GeekWire’s full list here). Many Seattle tech workers don’t want to move to the pricey Bay Area, and many working in Silicon Valley want to flee the outrageous prices.
Terraza argued that the Seattle housing market’s tight inventory for entry-level homes will increase home prices in the bottom tier. The growth of luxury home values, however, will slow in 2016.
Earlier this week, Zillow named Seattle the second hottest housing market for 2016, with home values forecasted to rise 5.4 percent year-over-year. Seattle renters are also expected to feel the financial squeeze. Rent in the city proper increased 11.3% last year, but it’s still a much cheaper alternative to Silicon Valley.
In a report last May, Seattle real estate brokerage Redfin found that twenty five percent of Bay Area residents on Redfin.com were looking for homes outside of the Bay Area, compared to one in seven residents who did so in 2011. Their most sought after areas: Portland and Seattle.