SAN FRANCISCO (Reuters) - San Franciscans have long blamed the technology sector for rising rents. Now, a study from real-estate company Trulia backs them up.
Rents are rising faster in U.S. tech hubs than in the rest of the country, Trulia said in a report released Thursday. In January, it said, rents rose 3.3 percent in the nation’s 100 biggest metropolitan areas in January, but they rose by an average of 5.7 percent in the 10 biggest tech hubs.
The report blamed the high prices on factors ranging from the lack of new-housing construction in many tech centers to the technology industry’s presence in areas that commanded top dollar even before the current technology boom.
Landlords ask one-third more in rent for a typical two-bedroom unit in a tech hub compared with other big metro areas, the report said - $2,053, on average, compared with $1,504 in other metropolitan areas.
San Francisco topped the list, with a 12.3 percent rise to a median average of $3,350 for a two-bedroom apartment. The city has seen unrest tied to home prices in recent months, with protesters who blame well-compensated technology workers for rising evictions and rents, and prevented technology-commuter buses from leaving their stops.
Meanwhile, some residents who have made fortunes through technology say they are being unfairly blamed, given that the companies they build up help create jobs. Venture capitalist Tom Perkins recently drew criticism for comparing the treatment of wealthy Americans to the Nazis’ persecution of the Jews.
Other tech centers with rapidly rising rents include San Diego, Calif., with a 10.3 percent rise to an average $1,850 for a two-bedroom home; Austin, Texas with a 10.1 percent rise to $1,350; and Seattle, Wash. with a 9.2 percent gain to $1,650.
Asking prices of houses for sale in technology hubs, however, rose in line with national trends, the report found. House prices in January rose an average 13.4 percent from a year ago in the nation’s 10 largest technology hubs, compared with 11.4 percent in 90 other metropolitan areas.
Tech hubs tend to have fewer homes stuck in foreclosure, the report’s authors wrote. When they adjust the numbers to reflect foreclosure inventory, the price change is no different compared with other metro areas.
But tech hubs have much higher home prices compared with other areas - $242 per square foot, compared with $133 per square foot in other areas, making them much less affordable, the report found.
“Tech hubs also have higher incomes, but not high enough to bridge the affordability gap,” wrote the report’s authors. “Just 48 percent of homes listed for sale were affordable to the middle class based on median metro household income, versus 63 percent in other metros.”
Trulia selected its top tech hubs by evaluating cities for the percentage of local employment in technology-related fields such as data processing and hosting, computer programming, software development, and Web development.
San Jose, Calif.; Seattle, Wash.; San Francisco, Calif.; Middlesex County, Mass.; Raleigh, N.C.; Bethesda-Rockville-Frederick, Md.; Austin, Tex.; Oakland, Calif.; Greater Washington, D.C.; and San Diego, Calif. comprised the 10 tech hubs studied for the report.
Reporting by Sarah McBride; Editing by Ken Wills