Best Tech Cities for Real Estate Investing: An Analysis of 6 Cities
Tech. Tech. Tech. It’s all the rage since Amazon started shopping for their second location. And since Denver remains a potential Amazon city, I thought it would be interesting to analyze popular, emerging tech cities for their investing attractiveness. (And again, a big shout out to my friend and fellow investor, Jennifer Ward, on this for helping me pull the numbers and sources.)
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We looked at six cities that are not at the top of the tech game yet, but are mentioned frequently in articles and conversations about tech and San Fran flight. Those six cities are Denver, Salt Lake City, Seattle, Phoenix, Austin, and Portland. And we looked at 10 factors (all with equal weight): rent-to-value, rent-to-income, taxes-to-value, insurance-to-value, annual appreciation, unemployment, crime, population growth, tech job growth, and an educated population.
We'll analyze each city individually, but when looking at the table below, know this: 1) green is good, 2) the averages are listed at the bottom, and 3) if you're interested in any city on here that we don't service (i.e. not Denver), reach out and we'll get you connected to an agent in that city who is investor friendly.
6 U.S. Cities Analyzed for Tech Job Growth & Investing Potential
We looked at 10 factors for this study: rent-to-value, rent-to-income, taxes-to-value, insurance-to-value, annual appreciation, unemployment, crime, population growth, tech job growth, and an educated population.
I help people buy and sell real estate in Denver, so this seemed like the obvious place to start. Denver was good on five of the 10 metrics, with strong marks for rent-to-value, taxes, unemployment, crime, and the population’s education. Denver returned outside of the average (in a bad way) on rent-to-income, insurance-to-value, annual appreciation, population growth, and tech growth. The negatives are a little misleading, as the average reflects performance against the other cities in this analysis, not cities nationwide. Based on the data I could pull, Seattle has the strongest tech growth by far (6.7), and the only two other cities I could locate this data point for (Denver and Austin) were at 0.7. None of the other cities even registered, so in a way, Denver comes in strong on 6 of the 10 metrics.
The two factors I care most about here are: 1) Denver’s educated population (all employers like this) and 2) Denver’s rating as a tech city. All and all, Denver appears to be a strong tech market with good indicators on investing.
Salt Lake City
Salt Lake City is strong on six of the 10 tech investment metrics, showcasing well in the following categories: rent-to-income, taxes, insurance value, unemployment, population growth, and an educated population. (I also strongly like Salt Lake City for real estate because like Colorado Springs, the politics are softening and it’s physically beautiful.) Of the cities we evaluated, Salt Lake City has the highest population growth. What I don’t like about Salt Lake City is the crime (apparently, there’s tons of non-violent property damage there) and the fact that it doesn’t have enough tech companies to register. Those are both negatives, but I still love Salt Lake City for its real estate potential.
I didn’t realize how superior Seattle was to Denver tech-wise until I compiled this list (and visited it last week). It’s strong on seven of the 10 factors—and much better on two of the factors that I liked about Denver: education and tech scene. Denver ranks 14th for the educated workforce, while Seattle comes in at nine. Denver has a 0.7 tech company rating; Seattle has a 6.7 rating. It also has incredible population growth (second only to Salt Lake City) and strong appreciation. Overall, Seattle has a lot going for it—but it is extremely expensive, so investors beware.
Related: Are Cities with Growing Income Inequality Better for Investing?
Let’s forget that it got so hot there in June that paint literally melted off road signs and simply focus on the fact that Phoenix only hit three of the seven markers, including crime—and I find that hard to believe. I’ve seen Phoenix’s nightly news, and its crime rate appears to be worse than Salt Lake’s. Other than that, Phoenix came in strong for rent-to-value and taxes. Phoenix definitely does not have enough going for it as an investment, much less a tech investment.
Denver and Austin are similar in their investing and tech potential. Both are strong in rent-to-value, unemployment, crime, population growth, tech job growth, and a populated education. And all metrics are not created equal, so we really care about unemployment, crime, population growth and tech growth—all of which are strong for both Denver and Austin. In terms of appreciation, Austin has a slight lead at 4.9% compared to Denver’s 4.16%.
I was expecting more out of our Northwestern cousin, but Portland is only truly strong for appreciation and education—and for education, it comes in at 38th, which is better than some of the other cities, but not incredibly strong.
Where is tech going? And if I’m basing an investment off of the strength of tech markets, where should I go? If you are basing an investment off of tech indicators, Seattle is strongest, closely followed by Austin and Denver. Austin and Denver have the advantage of being cheaper than Seattle, if not entirely low-priced themselves.
Again, if you are considering any of these markets, drop me a line and we can further discuss.
Good luck with your investing!