SAN JOSE (CBS SF) – As the tech boom continues to drive housing prices in Silicon Valley to even higher levels, the CEO of real estate company Redfin predicts a “mass migration” of tech companies from coastal cities to cheaper parts of the country.
“Silicon Valley is going to leave Silicon Valley,” Redfin CEO Glenn Kelman boldly proclaimed in an interview with CNBC on Wednesday, saying that talent is chasing affordable housing.
Kelman said the area’s housing prices and rents have become too expensive, even for tech giants such as Mountain View-based Google.
“Google employs more engineers outside of Silicon Valley than it does in Silicon Valley,” Kelman noted, “and if Google can’t afford Silicon Valley, then no one can.”
Kelman said the recently passed Republican tax plan, which limits the deduction on state and local taxes, would accelerate a shift away from coastal cities.
The Redfin CEO said cities such as Dallas, Denver, San Antonio and Houston would be among his top picks for real estate investment.
The housing shortage in Silicon Valley has made homes for sale under $500,000 virtually non-existent. Demand for multimillion-dollar homes is also far outstripping supply, and some are paying $1 million or more above asking to get into wealthy neighborhoods.
A recent study by HSH, which tracks mortgage information, found a median priced home in the San Jose market was $1,183,400 and that a salary of $221,500 is needed to afford the principal, interest, taxes and insurance.
Kelman went on to say coastal cities would remain desirable places to live.
“We’re not going to see an evacuation of San Francisco, but you are going to see a lot of people moving to other places,” he told the business network.
Tim Fang is a digital producer for CBS San Francisco and a native of the Bay Area. Follow him on Twitter @fangtj.