When a new iPhone is released, it doesn’t just signal the introduction of yet another Apple product, it also signals the rise of home prices in areas where the tech giant has offices. Protesters of rising home prices in the San Francisco area are blaming the technology sector, indicating the industry’s high salaries and generous stock options are fueling the increases.
Apple Inc., Google parent Alphabet Inc. and Facebook, Inc. are all concentrated in San Francisco and based near neighborhoods with rising home values. Zillow found Apple workers live in pricier homes than other residents in the region and home values are rising much faster in neighborhoods where Apple workers live. Home values have shot up 11% in San Jose and 14% in San Francisco in the year ending in October, according to real-estate website Trulia.
While cities around the US are looking to attract more tech jobs, there is the concern that the current population will be displaced as affordable places for middle-class families begin to dwindle. The change in home prices as the tech sector flourishes can be dramatic.
In San Francisco and San Jose, Apple employees lived in homes with a median value of $1.1 million as of July 2015. In comparison, the median home value for the entire San Jose metro area was $896,000. In San Francisco it was $757,000, according to Zillow.
Homes occupied by Apple workers are appreciating at 18% a year, compared with 11% for San Francisco as a whole and 12% for San Jose. Since iPhone sales launched in June 2007, the average difference between the median home value of Apple workers and San Jose workers has swelled to 20% from 13%.
Some sellers have decided to cash in on the rise in their homes’ value over the past few years and leave the area. “They realize that the appreciation has been so great that they can sell those places and move onto something different,” Paul Stone, a Redfin agent, said.
Furthermore, because homes are so expensive, many young people must rent. That has created a swell in demand for rentals. New construction has failed to keep pace. The result is that rents also have skyrocketed.
On the other hand, the trend bodes well for longtime residents of the neighborhoods Apple employees favor. Their home values are appreciating, leaving them or their heirs with bigger profits when it comes time to sell.
Do you think the tech sector will continue to drive up home prices? How can current residents best deal with this trend?
Read the full story here: