Lawrence Yun, the National Association of Realtor’s Chief Economist, has warned of an unusually large gap between high-priced and low-priced housing markets, and said this could give more affordable markets the chance to “better attract new residents and, more critically, new businesses”.
Writing in Forbes, Yun said the opportunity existed for more affordable housing markets to be able to attract new companies looking to set up shop in new locations.
For example, Yun notes how home prices in the Bay Area have accelerated upwards over the last thirty years, thanks to the technology sector and the high-paying jobs that come with it. In contrast, many Midwestern cities have seen little growth in home prices over the last thirty years.
Yun notes that Midwestern cities such as Cincinnati, where the average home sells for just $136,000, and Memphis, where homes sell at $141,000 on average, are significantly cheaper than in the San Franciso-Oakland metro market, where homes sell for $781,600 on average.
There is a precedent for what Yun is saying, for he recalls in his article that once-affordable markets such as Austin, Denver, Portland, Raleigh-Durham-Chapel, Salt Lake City and Seattle have all managed to promote housing affordability and skilled workers to attract technology companies to those areas. The idea is that companies can use the low cost of housing as an incentive to get employees to relocate.
“Therefore, it should be food for thought for many local officials in the Midwest to consider how to get new businesses to set up in their local affordable cities to take advantage of gaps in home prices,” Yun writes. “Houses are immobile but workers and businesses can be mobile.”