America’s Top Tech Hubs—and the Real Estate Growth It’s Driving

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Redfin as soon as revealed knowledge that confirmed for each 1% enhance in tech staff of their pattern of cities, there was a mean 0.49% enhance in residence costs. Granted, the article was revealed nearly 10 years in the past and wishes a refresh, however I believe the underlying assumption nonetheless holds: When an space provides many tech jobs, residence values enhance. 

Why is that this? I took market knowledge from CoStar and calculated which variables had been correlated most with worth progress over time. I discovered a powerful relationship between will increase in family revenue (and workplace employment) and will increase in home costs.

The nearer the correlation is to 1, the stronger the connection. Within the desk, we will see that actual property costs within the high metropolitan areas are strongly correlated with family revenue, workplace employment (which incorporates tech jobs), and complete employment, relying on the MSA.

High 10 Cities With Highest Tech Job Development

Subsequent, I took historic job occupation knowledge from the Bureau of Labor Statistics (BLS) and singled out job progress within the Pc and Mathematical Operations class (in different phrases, tech jobs). My standards for choosing the highest 10 markets had been:

1. Markets within the high 50% for complete tech jobs (this excludes small markets).
2. Markets with various tech jobs proportional to its dimension higher than the typical nationwide proportion (if a market had a small proportion of tech jobs, the outcomes might be skewed by Fb opening only one new knowledge middle on the town—one firm including one new knowledge middle is just not what I’d contemplate a “tech growth” for any market).
3. Complete employment over time should not be unfavorable (there have been some smaller markets that added a wholesome variety of tech jobs whereas their general employment declined).

High cities by five-year compound annual tech job progress

I ranked the remaining cities by their five-year compound annual tech job progress. This map reveals the five-year progress of the highest markets:

Nevertheless, among the markets with the best progress from 2018-2023 truly had little-to-negative progress when measured from 2022-2023, corresponding to Austin, Texas (1.77%); Provo, Utah (-5.74%); and Salt Lake Metropolis (-0.66%). This means their highest tech job progress durations occurred earlier than 2022 when the pandemic was raging. 

Whereas their five-year compound progress is spectacular, there are different cities which have an analogous five-year compound progress charge whereas additionally at the moment experiencing excessive one-year progress, as of the most recent measurements revealed by the BLS.

High cities by one-year tech job progress

I ranked every market by its one-year progress in tech jobs (from 2022-2023), whereas maintaining its five-year compound progress into consideration. This map reveals the outcomes:

As you reference this map, contemplate the five-year compound progress. Indianapolis could have had a 9.36% one-year progress charge in tech jobs, however its five-year compound “progress” charge is -0.4%, which implies over a five-year interval, it had a web loss of expertise jobs.

The highest 10 tech progress cities

Earlier than I calculated a high 10 checklist, I believed it was vital to incorporate the Location Quotient (LQ) within the rankings. In response to the BLS, the LQ is the proportion of a selected job kind relative to the typical proportion for the U.S. Here’s a direct quote from the BLS that helps clarify the LQ:

“An LQ higher than 1 signifies an trade with a higher share of the native space employment than is the case nationwide. For instance, Las Vegas could have an LQ higher than 1 within the Leisure and Hospitality trade as a result of this trade makes up a bigger share of the Las Vegas employment complete than it does for the nation as an entire.”

Within the case of tech job rankings, I filtered out all cities the place the LQ was lower than 1. I needed to solely embody cities with a higher proportion of tech jobs than the nationwide common.

Then I ranked the highest cities with the best one-year progress that additionally had a optimistic five-year compound progress charge. Listed below are the highest 10 outcomes:

Ogden, Sacramento, and Dallas stand out to me. Much more attention-grabbing is San Francisco’s general progress in tech jobs, which immediately contradicts many sources stating that it’s shrinking as a tech economic system.

However what about cities with a excessive variety of engineering and life sciences jobs? Whereas I’ve answered the query of “which cities have the best tech job progress,” I needed to go one step additional and look at the cities with essentially the most job progress in STEM fields (science, expertise, engineering, and arithmetic). 

High 10 Cities With Highest STEM Job Development

I began the evaluation by including all jobs within the Pc and Mathematical Occupations, Structure and Engineering Occupations, and the Life, Bodily, and Social Science Occupations, as outlined by the BLS, to get the entire STEM job rely for every metro in 2018, 2022, and 2023.

Right here’s a map of metros ranked by their five-year compound annual progress from 2018-2023. Cities weren’t included in the event that they didn’t make the highest 100 checklist or had unfavorable progress in all 4 STEM occupations.

Just like the tech progress map, understand that whereas some metros had a stable five-year annual compound progress charge, additionally they could have had a one-year decline in STEM jobs, corresponding to:

As well as, some locations with a comparatively weak five-year compound progress charge could have additionally seen excessive one-year progress, corresponding to Los Angeles (+8.39%); Raleigh, North Carolina (+8.32%); and Oklahoma Metropolis (+9.09%), which can point out they’re now bouncing again from their losses through the pandemic (in Los Angeles’ case) or are including STEM jobs quicker than they did through the pandemic (in Raleigh and Oklahoma Metropolis’s case).

Now, if we solely preserve the highest 50% of metros with the best one-year and five-year progress in STEM jobs after which rank by one-year progress, we arrive at these high 10 metros for STEM employment progress:

Once more, Sacramento and Ogden make the checklist (because of the excessive variety of tech jobs every metropolis added up to now 12 months). These metros weren’t on my private radar for funding earlier than—however greatest consider they’re now.

Listed below are another markets to think about:

• Bellingham, Washington, is a two-hour drive from Seattle, and Greeley, Colorado, an 80-minute drive from Denver. These metros may be benefiting from folks trying to find a decrease price of residing than their prime MSA (like Seattle or Denver), whereas nonetheless remaining within the common space.
• Rochester, Minnesota, can also be about 90 minutes away from Minneapolis and is probably going benefitting from the success of the Mayo Clinic, extensively considered the most effective hospitals on the planet.
• Charleston, South Carolina, is at the moment experiencing stable STEM employment progress, wholesome inhabitants progress, and good worth appreciation.

Ultimate Ideas

An increase in tech employment can result in increased wages for a metropolitan space. This can lead to actual property worth appreciation over time. Shopping for and holding in an space with STEM employment progress might be a wonderful technique if solely to trip a wave of appreciation over time.

Due to their progress in tech jobs, Ogden and Sacramento ought to keep in your radar. I might additionally preserve the Analysis Triangle space (Raleigh-Durham-Chapel Hill) in thoughts, as its three main universities proceed to supply an informed workforce able to fill the space’s rising tech sector.

In case you’d like assist selecting a market to put money into based mostly on variables like inhabitants progress, affordability, and unemployment charges, the BiggerPockets Market Finder could also be useful.