The gap between high-priced markets and low-priced markets is growing “unusual in magnitude” and “may signal an opportunity for affordable markets to better attract new residents and, more critically, new businesses,” writes Lawrence Yun, National Association of REALTORS®’ chief economist, in a new column at Forbes.
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For the Midwest, in particular, this could present a big opportunity to lure more companies.
Home prices in many Midwestern cities have seen little growth over the past 30 years. On the other hand, Bay Area home prices – due mostly to its booming tech sector – has attracted high-paying jobs that have helped home prices accelerate. As of the final quarter of 2015, the average single-family home price in the San Francisco-Oakland metro market and the San Jose-Santa Clara market were $781,600 and $940,000, respectively.
On the other hand, homes in several mid-sized cities in the Midwest were selling for way less, such as $136,600 in Cincinnati; $141,000 in Memphis; $149,500 in Indianapolis; and $167,500 in Kansas City.
Yun notes that some previously affordable metro markets have benefited from the price gaps in luring companies and employees. Take for example, Austin, Denver, Portland, Salt Lake City, Seattle, and the Triangle Area of Raleigh-Durham-Chapel Hill, which all have attracted high-tech companies while promoting housing affordability and skilled local workers. Companies can use low housing costs as an incentive for 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 says. “Houses are immobile but workers and businesses can be mobile.”
Source: “Opportunities From Widening Price Gaps,” Forbes