Redfin as soon as printed knowledge that confirmed for each 1% improve in tech staff of their pattern of cities, there was a mean 0.49% improve in dwelling costs. Granted, the article was printed nearly 10 years in the past and desires a refresh, however I feel the underlying assumption nonetheless holds: When an space provides many tech jobs, dwelling values improve.
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 robust relationship between will increase in family earnings (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 prime metropolitan areas are strongly correlated with family earnings, workplace employment (which incorporates tech jobs), and complete employment, relying on the MSA.
Prime 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:
- Markets within the prime 50% for complete tech jobs (this excludes small markets).
- Markets with numerous tech jobs proportional to its dimension larger 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 heart on the town—one firm including one new knowledge heart will not be what I’d take into account a “tech growth” for any market).
- Whole employment over time should not be unfavorable (there have been some smaller markets that added a wholesome variety of tech jobs whereas their total employment declined).
Prime 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, a number of the markets with the very best progress from 2018-2023 really had little-to-negative progress when measured from 2022-2023, similar to Austin, Texas (1.77%); Provo, Utah (-5.74%); and Salt Lake Metropolis (-0.66%). This means their highest tech job progress intervals occurred earlier than 2022 when the pandemic was raging.
Whereas their five-year compound progress is spectacular, there are different cities which have the same five-year compound progress charge whereas additionally at present experiencing excessive one-year progress, as of the newest measurements printed by the BLS.
Prime cities by one-year tech job progress
I ranked every market by its one-year progress in tech jobs (from 2022-2023), whereas preserving its five-year compound progress into consideration. This map reveals the outcomes:
As you reference this map, take into account 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 suggests over a five-year interval, it had a internet loss of know-how jobs.
The highest 10 tech progress cities
Earlier than I calculated a prime 10 checklist, I believed it was vital to incorporate the Location Quotient (LQ) within the rankings. In accordance with the BLS, the LQ is the proportion of a particular 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 larger than 1 signifies an trade with a larger share of the native space employment than is the case nationwide. For instance, Las Vegas could have an LQ larger 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 larger proportion of tech jobs than the nationwide common.
Then I ranked the highest cities with the very 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 fascinating is San Francisco’s total progress in tech jobs, which instantly 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 very best tech job progress,” I needed to go one step additional and look at the cities with probably the most job progress in STEM fields (science, know-how, engineering, and arithmetic).
Prime 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 full STEM job depend 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, remember the fact that whereas some metros had a strong five-year annual compound progress charge, in addition they could have had a one-year decline in STEM jobs, similar to:
As well as, some locations with a comparatively weak five-year compound progress charge could have additionally seen excessive one-year progress, similar 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 throughout the pandemic (in Los Angeles’ case) or are including STEM jobs quicker than they did throughout the pandemic (in Raleigh and Oklahoma Metropolis’s case).
Now, if we solely maintain the highest 50% of metros with the very best one-year and five-year progress in STEM jobs after which rank by one-year progress, we arrive at these prime 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 yr). These metros weren’t on my private radar for funding earlier than—however finest imagine they’re now.
Listed below are another markets to contemplate:
- Bellingham, Washington, is a two-hour drive from Seattle, and Greeley, Colorado, an 80-minute drive from Denver. These metros may be benefiting from individuals trying to find a decrease value of residing than their prime MSA (like Seattle or Denver), whereas nonetheless remaining within the normal 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 thought to be among the best hospitals on the earth.
- Charleston, South Carolina, is at present experiencing strong STEM employment progress, wholesome inhabitants progress, and good worth appreciation.
Closing Ideas
An increase in tech employment can result in greater 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 may very well be a wonderful technique if solely to experience a wave of appreciation over time.
Because of their progress in tech jobs, Ogden and Sacramento ought to keep in your radar. I might additionally maintain the Analysis Triangle space (Raleigh-Durham-Chapel Hill) in thoughts, as its three main universities proceed to provide an informed workforce able to fill the space’s rising tech sector.
If you happen to’d like assist selecting a market to spend money on primarily based on variables like inhabitants progress, affordability, and unemployment charges, the BiggerPockets Market Finder could also be useful.
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Notice By BiggerPockets: These are opinions written by the writer and don’t essentially signify the opinions of BiggerPockets.