The correlation between the cash rich tech employees and the prices of homes had become a foregone conclusion. It has been seriously discussed and lampooned. One thing has been established though, the phenomenon of rising home prices with the influx of tech workers is real and is happening all throughout the United States.
According to Zillow Chief Economist Svenja Gudell, "Tech workers catch grief for driving up housing prices in some parts of the country. At the same time, they pay quite a bit more in real estate taxes, which helps finance everything from local parks to keeping streetlights on." Furthermore, the report from Zillow said that tech households nationwide paid an average of $4,214 in property taxes for 2014. Non-technical households on the other hand paid only $2,885.
This is very evident in the Bay Area, specifically the San Jose Metro area. Tech households paid on average $8,889 in property taxes compared to $6,003 for non-tech households. In the San Francisco Bay area, tech households paid $7,531 while non tech households paid $5,606.
This phenomenon, alongside surging rental rates, sky high real estate prices and the burgeoning tech sector is reminiscent of San Francisco in 2000. According to a report from MarketWatch, San Francisco 2016 has the same qualities as San Francisco 2000, right before the tech bust of the era.
For San Francisco, the median value of homes has risen from $670,000 at the start of 2012 to $1.12 million for April 2016. It had been noted that the surge in prices for homes in 2016 was at a more accelerated pace compared to the period between 2003 and 2006. This resurgence was last seen prior to the dot-com boom and then bust.
Home prices have reached 10 percent above their 2005 levels and 62 percent above the 2012 post recession low.
