Aspiring entrepreneurs and coders have been moving to Silicon Valley in droves for the last half-century.
But home prices are rising so rapidly that Bay Area residents are increasingly looking to go elsewhere.
Where are they going? Seattle, Portland, and Southern California, mostly.
“It’s possible that these people are searching for second homes, but given that they’re looking in big cities like Seattle and Portland, that doesn’t seem too likely,” Redfin CEO Glenn Kelman said to Business Insider.
Seattle — a tech hub in its own right — has seen the biggest increase in searches by Bay Area Redfin users, rising from 1.2% in 2011 to 5.1% in the first half of 2015.
Silicon Valley home prices have risen astronomically in the past decade. As of the first half of 2015, the median sale price for a home in Silicon Valley was $US1,050,000 — for comparison, it’s $US565,00 in Seattle and $US375,000 in Portland, according to Redfin’s analysis.
This means that all but the very wealthiest of the wealthy are being priced out of the Valley.
It’s even expensive for software developers, the very talent that Silicon Valley has attracted. According to PayScale, the median software developer salary in San Jose is $US112,000 a year.
That’s significantly more than developers make in other cities. In Seattle, the median software developer salary is $US100,000, while in Portland, it’s $US79,700.
Given the median sale price, however, you’ll need to make about $US212,800 a year to afford a mortgage on a Silicon Valley home.
No wonder people are looking to move somewhere else.
“They’re still writing code, still building products, but they’re doing it in Boulder instead of San Francisco,” Kelman said. “They’re trying to recreate that same culture of innovation outside of the Bay Area.”
As these high-salaried tech workers move to other cities, a whole new set of anxieties arise. Kelman calls these imminent changes the “Valley-fication of America.”
“They’re coming in to these new markets with a lot more money, and everything becomes more expensive. Some might see this as the apocalypse — and there will be more gentrification — but some will see it as a benefit to the culture. It invigorates the economy,” Kelman said. “With good leadership, you can balance wealth creation with being a good influence on the city you’re building you company in.”
Still, is it possible to build a really successful tech company outside of Silicon Valley?
“The Valley is still the best place in the world to start a company, but the next steps can be harder, as there’s so much headhunting and so few companies have money like Google and Facebook,” Kelman said. “It used to be that you really needed proximity to a natural resource to be successful in business. Now that resource is software developer talent, and you have to consider, ‘Where do software engineers really want to live?’ “
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