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The news that a major tech company plans to invest in your town or city is usually cause for celebration. The investment brings with it additional infrastructure, amenities and housing. Existing homeowners gleefully anticipate the increased equity in their homes. However, locals looking forward to buying or renting in their neighborhood will likely experience the opposite emotion – the pain of being squeezed out of their hometowns.
There’s no question that tech has transformed many cities for the better. According to CBRE’s latest Tech-30 report, the emergence of AI saw tech companies increase U.S. office leasing to 18% in the first three quarters of this year. Post-pandemic, returning occupants to city office spaces must be considered good. Unfortunately, high-paying tech jobs also mean that cities where Big Tech has an imprint have become unaffordable for many people. Here’s a look.
According to a report by Tech: NYC, New Yorkers earning the city’s average annual wage could afford less than 5% of the rentals on the market in 2023, a figure likely to remain or worsen when 2024’s numbers are calculated. Even tech workers – whose wages are higher than average – could afford about one in three rentals in the city. The numbers were even more alarming for entry-level tech workers, who could afford only about one out of every 50 available rentals.
Nowhere is the housing crisis more acute than in the home of tech – where all the powerhouse tech companies – Apple, Google, Nvidia and Facebook – have their company headquarters. The median cost of housing in Silicon Valley is currently around $2M, according to Globestreet and backed by Zillow. That meant the city had to fund affordable housing projects for teachers, while many essential workers commuted long distances to work. According to an April National Association of Realtors report, in the San Jose area, you must make $468,252 – the highest of all 221 U.S. metro markets – to afford a house.
