What Happens to Home Prices When Technologists Come to Town • Hacker News Board

Re: What Happens to Home Prices When Technologists Come to Town

#41

Post by mc32 » Fri, Jun 19, 2015, 11:03 PM UTC

manyxcxi wrote: post #17

If we were having a gold rush we'd be complaining about miners driving up prices. The tech sector is no different in that regard. I like the correlations they've drawn to the performance of individual companies, etc. but to promote the idea that these companies are any different from any other company in any other industry that would be going through the same growth is a bit off target in my opinion. What would be in…

Exactly the same phenomenon happens when hydro fracturing comes to town. Except the ramp up is much faster and incurs much more disruption and, unfortunately, so far, is far more short lived. By the time municipalities catch up with the demand the industry goes into a bust.

Technology on the other hand brings, so far, long term prosperity to previously declining areas. The problem I see is that municipalities want the prosperity without the consequences. They want the tasty burger without the cholesterol. Western economies, or rather, societies, have this strange unease with rapid urban expansion. An unease I have not encountered so much in Eastern economies and societies. In the east, progress is seen as generally good, whereas the west has greater suspicion of it.

Re: What Happens to Home Prices When Technologists Come to Town

#42

Post by dragonwriter » Fri, Jun 19, 2015, 11:05 PM UTC

jsuar wrote: post #36

dragonwriter wrote: post #30

Earlier quoted context omitted.

Bubbles are supply + demand in action, but where the demand is driven in large part by perceived future value where the underlying fundamentals to support that future value do not exist. That homes are being paid for in cash doesn't indicate that there isn't a housing bubble -- it does mean that if there is, its not likely significantly an effect of a mortgaged-backed-securities bubble the way the pre-2009 national h…

The question becomes, if there is a bubble, what could make it pop? Tech jobs leaving the area and not creating salaries that support existing house prices?

> Tech jobs leaving the area and not creating salaries that support existing house prices?

Sure. But other things could, too -- bubble-driven overbuilding of new housing and then having the influx of jobs stop could do it, especially if updates to shared infrastructure were deferred and the tax revenue to support them didn't materialize because the growth stopped -- the new houses would sell at lower prices because the new higher-paid workers they were made to appeal to wouldn't be there, but the total infrastructure demand would be similar, adversely affecting property desirability.

There's probably other scenarios -- and I'm not saying it is a bubble or that any particular popping scenario is likely (I don't know Austin that well), just that the fact that purchases don't seem to be mortgage-fueled doesn't mean that there isn't a bubble.

Re: What Happens to Home Prices When Technologists Come to Town

#43

Post by pnathan » Fri, Jun 19, 2015, 11:05 PM UTC

eonw wrote: post #15

ask seattle, they are dealing with it now and many of the locals aint to happy. not only have housing prices gone up, traffic and crime have as well.

Many of the locals appear to be avidly hoping to follow SF in anti-growth measures and laws.

Re: What Happens to Home Prices When Technologists Come to Town

#44

Post by pnathan » Fri, Jun 19, 2015, 11:08 PM UTC

As someone who moved to Seattle for a tech job, it's very exciting seeing the boom. Jobs are spraying everywhere; hope and life are flowing. It is frustrating to see the house prices go up, but the sense of change in the air is often almost palpable. Very thrilling.

Re: What Happens to Home Prices When Technologists Come to Town

#45

Post by simantel » Fri, Jun 19, 2015, 11:09 PM UTC

eclipxe wrote: post #23

serve_yay wrote: post #11

It's a very discouraging time to try to buy a home in Portland now. I can't really figure out what to do about it.

What is the market like there?

Prices have gone up something like 20% in the last year. Houses are going for $10-20k over asking in cash within days of being listed.

Re: What Happens to Home Prices When Technologists Come to Town

#46

Post by saryant » Fri, Jun 19, 2015, 11:12 PM UTC

kansface wrote: post #32

geebee wrote: post #12

It's still an open question as to whether this will cause San Francisco level problems. It may turn out to be a very good thing in moderation. I think people forget that until very recently, San Francisco was actually rather fond of its tech industry. It was viewed as a creative, slightly quirky, and generally positive culture that fit right in. Tech is actually a pretty good industry to have around. Supposedly tech…

> It's still an open question as to whether this will cause San Francisco level problems SF's (SV's) problem is that it refuses to build houses commensurate to the number of people who move there. Any number of well paid jobs from any industry would have caused the same problem. High paying (middle class) jobs (outside of manufacturing) are not a problem. > If this just means that tech is finally spreading out a bit…

Compare the population growth in the Houston MSA against San Francisco's: the Houston area grew by 9.6% between between 2010 and 2014 while the SFBA grew by 5.9%.

Compare that to the two regions' 5-year housing price index (a measure of the movement of housing prices). The Bay Area sits at 36 yet Houston at 25. Despite faster population growth, Houston's housing prices have not risen nearly as dramatically.

I have to imagine that can be at least partly attributed to the seemingly limitless number of houses being built around Houston.

(This comparison would probably make more sense if we could compare CSAs rather than MSAs but I couldn't find a breakdown of housing price trends at that level)

Re: What Happens to Home Prices When Technologists Come to Town

#47

Post by scarmig » Fri, Jun 19, 2015, 11:14 PM UTC

kansface wrote: post #32

geebee wrote: post #12

It's still an open question as to whether this will cause San Francisco level problems. It may turn out to be a very good thing in moderation. I think people forget that until very recently, San Francisco was actually rather fond of its tech industry. It was viewed as a creative, slightly quirky, and generally positive culture that fit right in. Tech is actually a pretty good industry to have around. Supposedly tech…

> It's still an open question as to whether this will cause San Francisco level problems SF's (SV's) problem is that it refuses to build houses commensurate to the number of people who move there. Any number of well paid jobs from any industry would have caused the same problem. High paying (middle class) jobs (outside of manufacturing) are not a problem. > If this just means that tech is finally spreading out a bit…

I'm a tech booster, and building and zoning restrictions certainly don't help the housing problem here. But I think it's a wee bit disingenuous to suggest it's as easy as waving a magic wand and watching all the house prices fall to Stockton levels.

Even if the rate of new construction pentupled, it wouldn't lower house prices; at best it'd make them increase at a slightly slower rate. It's a good idea on its own for the purposes of environment and urban development, but pretending that it'd suddenly allow a day laborer or a teacher's aide to be able to afford rent or ownership here adds as little as the people saying tech workers are source of all evil in the world.

Re: What Happens to Home Prices When Technologists Come to Town

#48

Post by SlipperySlope » Fri, Jun 19, 2015, 11:25 PM UTC

chiph wrote: post #27

People in Austin are saying it's a bubble. But it isn't - a significant number of homes are being paid for in cash. Often $10-20k over the asking price. Those that are being financed have fairly solid support behind them (20% or more being put down). It's not a bubble - it's supply + demand in action. Which means that housing will be tight until the builders can catch up. Unfortunately, Austin's roads and other infra…

A tech job brought me to Austin in 1999. No state income tax and plenty of ranch land for development nearby. The University of Texas at Austin has a very powerful supercomputer and lots of sponsored research. Apple has a huge campus in North Austin and is a model for tech companies expanding out of Silicon Valley.

My friends here want me to tell you that 'Austin is Full', but everywhere you look there are help-wanted signs.

Re: What Happens to Home Prices When Technologists Come to Town

#49

Post by seanflyon » Fri, Jun 19, 2015, 11:31 PM UTC

scarmig wrote: post #47

kansface wrote: post #32

Earlier quoted context omitted.

> It's still an open question as to whether this will cause San Francisco level problems SF's (SV's) problem is that it refuses to build houses commensurate to the number of people who move there. Any number of well paid jobs from any industry would have caused the same problem. High paying (middle class) jobs (outside of manufacturing) are not a problem. > If this just means that tech is finally spreading out a bit…

I'm a tech booster, and building and zoning restrictions certainly don't help the housing problem here. But I think it's a wee bit disingenuous to suggest it's as easy as waving a magic wand and watching all the house prices fall to Stockton levels. Even if the rate of new construction pentupled, it wouldn't lower house prices; at best it'd make them increase at a slightly slower rate. It's a good idea on its own for…

You don't need to bring prices down to Stockton levels to avoid San Francisco level problems.

Re: What Happens to Home Prices When Technologists Come to Town

#50

Post by beatpanda » Fri, Jun 19, 2015, 11:37 PM UTC

pnathan wrote: post #44

As someone who moved to Seattle for a tech job, it's very exciting seeing the boom. Jobs are spraying everywhere; hope and life are flowing. It is frustrating to see the house prices go up, but the sense of change in the air is often almost palpable. Very thrilling.

That's funny, because everyone I know from or in Seattle who doesn't work in tech is talking about how it feels like their city is under attack and being destroyed, sort of like how it feels for everyone not in tech in the Bay Area.