Most people think of tech jobs as providing nice high salaries, but in many tech hubs rent prices are rising even faster than the tech salaries may be able to support, according to new research.
“While there are clear advantages to living in or near a tech hub, more people relocating to these cities can put a certain pressure on the rental market, leading to rising rents,” says a new report from RentCafe.
And with a new generation of startups going public soon, things will get scorching in America’s hottest housing markets, even for renters with high-paying tech jobs, the report says.
“Over a 3-year period, rents grew faster than the wages of IT employees in 10 of the top 15 largest tech hubs, according to our latest analysis of US Census, BLS and Yardi Matrix data.” And here’s the real kicker: half of the top 10 emerging tech hubs are already seeing this trend as well.
Rent prices rising in tech hubs: Quick facts from the study
- San Jose, the pride of Silicon Valley, has the largest share of IT jobs, 12%, and is one of two metros where wages of IT employees have decreased while rents soared. So much so that metro San Jose exhibits the largest gap between rent and wage growth.
- Other established tech hubs where wages didn’t keep up with rents were Seattle, Atlanta and Boston.
- Looking at up-and-coming metros, Charlotte ranks first with a 37.5% increase in the number of IT jobs between 2014 and 2017. And the rental market is already reacting: Prices here jumped by 7.6% since 2016, outpacing wages in terms of growth. The same scenario applies to Salt Lake City and Miami.
- For those looking for more affordable emerging tech hubs, Madison and Nashville are go-to destinations, thanks to healthy growth rates in IT of 26% and 22% respectively. (Though relocating here means you have to be happy with a lower wage than in other areas.)
- The ubiquitous San Francisco is again the exception that proves the rule. With the priciest apartments among all tech hubs ($3,084/month) and a strong 5.8% rent growth, The Golden City has seen its pool of IT employees increase by 19%. Moreover, it managed to boost tech salaries by 13.9%, the biggest wage growth seen by any tech hub in the top 10 over a 3-year period. However, with expected IPOs, these positive trends might turn dire for some social groups.
Seattle near the top
Seattle is a top metro tech hub, where the presence of both Microsoft and Amazon has certainly helped the metro reach its high 6.8% share of IT jobs.
Salaries in the metro remain considerably high at $115,500, but so are rents, which increased by 11.7% in a 3-year period, reaching an average of $1,825 in 2019.
RentCafé used the ‘Computer and Mathematical Occupations’ from The Bureau of Labor Statistic database for IT jobs-related data and took into consideration the 2014 and the 2017 data at metro level (most recent BLS data). The average wages in IT jobs were calculated based on the most current wage data from The Bureau of Labor Statistics (2017) adjusted for inflation to 2019 dollars and rounded to the nearest hundreds. The rent data were provided by Yardi Matrix, a RentCafé sister company focusing on apartment market intelligence and providing up-to-date information on large-scale multifamily properties of 50 units or more in over 130 U.S. markets.