Other Tech Markets Attract Renters Being Priced Out of Bay Area

As Renters Get Priced Out of Bay Area, Other Tech Markets Have Become More Attractive

With the Bay Area losing its luster among investors, Austin, Dallas, Charlotte, N.C. and Tampa are more viable options


Stretching along the peninsula southwest of San Francisco Bay, Silicon Valley is the epicenter of the technology universe. And like moths to a flame, the best and brightest are attracted to the area to join the innovative companies headquartered there.

Lately, though, it seems that some of these techies are changing course and flocking to other tech-friendly U.S. cities in search of greener pastures and lower rents. For real estate investors, this is a trend well worth noting because employers fuel the single-family rental market, thus increasing the long-term value of their investment assets.

“After years of being overrun by new residents drawn to a red-hot economy, the number of people moving out (of the region) has begun to catch up with the number moving in, new census data show,” reports the San Francisco Chronicle.

Is the uptick in people leaving the Bay Area a trend, or merely a passing phase? And what are the key drivers behind this regional restlessness?

The Bay Area has an oversupply of skilled works for the number of jobs is intense, even for overqualified individuals. At the beginning of April, Indeed.com reported that nearly 40 percent of Bay Area tech workers on its site were looking for a job elsewhere. In short, workers are turning to other, more attractive innovation hubs, where the competition is perhaps not as daunting.

To many, the Bay Area has become unlivable, with overcrowded conditions and too much traffic, resulting in a loss of culture. There is a sense that the city once known for its artist and alternative enclaves has been altered by the tech takeover, and is now filled with homogeneous “tech bots.”

But the most obvious hot-button issue is the rising cost of living throughout the Bay Area and in the Silicon Valley. The median home price in both San Francisco and San Jose hovers around $1 million.

The inability of most people to purchase a home, put down roots and enjoy a balanced lifestyle has caused the recent exodus. The bottom line is that San Francisco is a city full of renters, with too few able to buy property. With the most recent tech boom, many are losing hope when it comes to home buying.

For many residents, the trade off just isn’t worthwhile anymore; they want to be financially secure, not living paycheck to paycheck. As of June 2017, the top 10 cities that have gained the most workers are:

  1. Seattle
  2. Denver
  3. Austin
  4. Portland
  5. Charlotte, N.C.
  6. Tampa, Fla.
  7. West Palm Beach, Fla.
  8. Nashville, Tenn.
  9. Las Vegas
  10. Dallas/Fort Worth

At the end of the day, the real question for real estate investors is, “Is this trend a blip on the radar, or a sign of things to come?” Instead of investing in high-rent locations with somewhat softening demand, it might be better to consider metro areas with lower price points and affordable rents, such as Dallas and Charlotte, N.C., which have healthy economies and a growing technology sector base.

After reflecting on your financial goals, the question is whether the Bay area is a smart investment location for you. When you need an expert perspective, HomeUnion® is there to help. Our Solutions Managers are available to provide insight and information every step of the way. We put big data at your fingertips, along with local real estate experts, and the key research you need to invest in line with your individual goals.

Schedule a consultation with HomeUnion® today to see whether investing in the Bay Area versus investing in Texas and the Southeast provide better opportunities from a rental returns perspective.

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