It’s no secret that housing prices in San Francisco’s Bay Area are reaching mind boggling levels.
A lot of things are driving the boom, but high salaries for tech industry workers is at least partly to blame — and online real estate service Zillow has some numbers to prove it.
The report says Silicon Valley home values in general have recovered much faster than other parts of the country after the recession. The nationwide median home value is still 8% below its pre-recession peak, while median home values in San Francisco and San Jose are both 7% and 21% above its pre-recession peak, it said.
The average price of homes in areas where big tech companies are located seem to have gone up even faster:
- The typical worker living in and around Apple’s Cupertino campus lives in a home that’s worth about $US1.14 million, or $US241,000 (27 per cent) more than the median home in the already-pricey San Jose metro area and $US380,000 (50 per cent) above the median home value in the San Francisco metro area.
The average private-sector employee working in areas close to the Googleplex in Mountain View lives in a census tract where the median home value is $US1.28 million.
Facebook workers who live near the company’s Menlo Park headquarters are in an area where the median home value is about $US1.25 million.
The iPhone boost
Also worth noting is the fact that the home values of Apple workers soared much faster after the first iPhone’s release in 2007. Before 2007, average Apple workers lived in homes that were 13% more expensive than those in San Jose, but now that gap has widened to 20%, Zillow’s report says.
“The tech industry is transforming the housing market in California’s booming Silicon Valley, as home values in the neighbourhoods in which well-paid employees from the area’s technology giants tend to cluster rise more quickly than home values in surrounding neighbourhoods,” writes Zillow’s senior economist Aaron Terrazas.
This could turn into an even bigger problem as the rise in home prices are far outpacing the increase in average income levels. According to the California Association of Realtors, only 10% of households can afford to buy median homes in San Francisco, as you’ll need to earn at least $US268,000 a year to afford the purchase.
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