The influx of homebuying tech workers from Silicon Valley to Austin won’t be slowing down

The influx of homebuying tech workers from Silicon Valley to Austin won't be slowing down

In February, the Open Listings team did some research into how home affordability was even becoming a problem for six-figure salaried tech workers across Silicon Valley.

We used the lending industry’s standard “28% rule” as a barometer for evaluating if tech workers in Silicon Valley and Los Angeles would be approved for a mortgage — let alone really be able to afford home ownership within a 20 minute commute from their offices on their salaries only.

Our findings were pretty astonishing. For instance, Apple, Google & Twitter workers would need to spend 30%+ of salaries to afford a home nearby work in Silicon Valley. Software engineers at Apple had it the worst. They would have to pay an average of $5,211 a month on a mortgage of a median-priced home in Cupertino…if they could get approved for a mortgage.

As we officially launch in Austin this week — a city that is also increasingly shaped by technology workers — we revisited our findings for San Francisco and pulled data on Austin to compare live and work affordability:

The influx of homebuying tech workers from Silicon Valley to Austin won't be slowing down

Tech workers in ATX fare much better when it comes to home ownership prospects

When it comes to home affordability, technology workers in the capital city appear to be doing much better than their colleagues in California. So, we probably won’t see a slowdown in the influx of homebuying technology workers to ATX anytime soon.

The first sign of the vast difference between Austin and Silicon Valley housing markets? The median average of home sale prices.

In the Bay Area, the median home sale price in the areas near the tech companies we looked at was an astronomical $1,203,750. Across Austin, the median home sale price around the offices of tech companies companies such as Dell, HomeAway, Indeed and Google was $265,011.

Only a difference of $938,739. ?

While the median salary for software engineers in Austin at the companies we analyzed ($124,582) was nearly half of the average salaries of software engineers at the companies we analyzed across the bay area ($210,500), the surplus of not spending $938,739 on a house can go a long way in padding an income.

In fact, in Austin, tech workers at all the companies we looked at would be able to afford a home within a 20 minute drive to work without ever really getting close to the 28% threshold.

The best illustration of this is comparing what Google, Facebook and Apple software engineers face in San Francisco versus Austin.

The influx of homebuying tech workers from Silicon Valley to Austin won't be slowing down

The struggle is real for Apple HQ workers

  • After putting 20% down, a 30-year monthly mortgage payment on a home in Silicon Valley (at a 4% rate and with property tax included), would set a software engineer at Apple back $5,211 a month — 33% of their monthly $15,667 pre-tax income.
  • Compare those prices to a home near work at Apple’s Austin office (with a pretty hefty Travis County property tax included) would be $1,393 a month — just 11% of their monthly $12,914 pre-tax income.
  • Despite a $188,000 salary in the Bay Area, an Apple engineer has only $10,456 left in pre-tax, monthly income after housing costs. Comparatively, Apple engineers on a $154,963 salary in Austin have $11,521 left in pre-tax, monthly income after housing costs.

To make matters even better for Austin tech workers, there’s no state income tax. Compare that to California workers in this income bracket, who shell out 7.39% in state income taxes each paycheck.

Google workers in ATX & Bay Area fare more similarly due to wage differences

  • After putting 20% down, a 30-year monthly mortgage payment on a home in Silicon Valley would set a software engineer at Google back $4,947 a month, AKA 32% of their monthly $17,667 pre-tax income.
  • A home near Google’s Austin campus would be $1,942 a month for a Google worker — 16% of their monthly $12,446 pre-tax income.
  • A Google worker on a $212,000 annual salary in the Bay Area has $12,048 left in pre-tax, monthly, income after housing costs. Comparatively, a Google worker on a $149,348 annual salary in Austin has $10,504 left in pre-tax, monthly income after housing costs.

In this case, Google employees in Austin have slightly less money left in their wallets each month after housing and pre-taxes. But, the ~$1,400 paid in California state taxes each month would all but wipe out the difference.

ATX Facebook workers take home slightly less pre-tax, but don’t have to face state income taxes

  • After putting 20% down, a 30-year monthly mortgage payment on a home in Silicon Valley would set a software engineer at Facebook back $5,431 a month, making up 29% of their monthly $18,417 pre-tax income.
  • For Austin area workers living near Facebook’s 6th Street office, this same payment would be $1,932 a month for a Facebook worker — 13% of their monthly $14,374 pre-tax income.
  • A Facebook worker on a $221,000 annual salary in the Bay Area has $12,986 left in pre-tax, monthly income after housing costs. Comparatively, a Facebook worker on a $172,490 annual salary in Austin has $12,442 left in pre-tax, monthly income after housing costs — a negative pre-tax difference of only $544 a month for Austin Facebook workers.

Our methodology:
Using the Open Listings platform, we compiled the median home sales prices near the headquarters (within a 20-minute commute time of some of Austin and the Bay Area’s largest and most well-known technology companies. We then used public salary data from Paysa to get average salaries for software engineers working for each company at these locations.

From there, we calculated the percentage of technology workers’ monthly income would be put towards a mortgage for a home nearby. Then, we estimated the monthly cost of owning a home by using the mortgage payment for a 30-year year fixed loan with a 4% interest rate and added property tax to this figure based on the local rate in order to paint a more accurate picture of what a monthly payment would look like.

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