EV Tech Industry Boosts US Secondary City Real Estate
The EV (Electric Vehicle / Hybrid) technology industry is growing in strength in the United States, with sales of electric vehicles faster growing than standard cars during the first half of 2021. A new massive infrastructure law would also devote significant funds to the creation of EV charging stations, and investors are increasingly placing their money in electric vehicle exchange-traded funds, or ETFs, indices of companies creating electric, hybrid or autonomous vehicles, or the batteries these cars need.
And as EV tech companies grow, real estate in many parts of the United States is expected to benefit from the influx of new tech workers and local economic growth. Beyond Silicon Valley, there are burgeoning EV technology hubs in cities like Austin, Texas, Pittsburgh, Detroit, and Phoenix. Brokers in these cities say growing EV tech companies moving to their areas have helped boost the real estate market, with increased demand driving up prices and accelerating the pace of sales. They anticipate that the industry in their region will continue to exert a powerful influence on the real estate market in the months and years to come, as support companies settle in to offer the particular products and services that employees demand. of technology.
“New STEM [science, technology, engineering and mathematics] jobs tend to be in areas where a lot of people are already moving because they have growing industries that recruit a lot, ”said Danielle Hale, chief economist at realtor.com. “Even in a world where a lot of people work remotely, they still like to locate in areas that will provide them with maximum employment options, especially relatively affordable tech centers like Austin.”
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In the Austin area, for example, Tesla founder Elon Musk is building a facility for Cybertrucks, the company’s first electric pickup truck, and has moved to the Texas capital himself. The city has had a booming tech industry for some time now, and the growing electric vehicle industry is further fueling the demand for real estate.
“It had a significant impact on real estate,” said Jacob Sudhoff, CEO of the Texas region with Douglas Elliman.
“It’s like a gold rush of sorts. People from California and the West Coast, New York and Chicago are all moving to Silicon Hills and the Austin area, ”Ms. Sudhoff said, using the hilly West Austin nickname where there are many technology companies. “With the arrival of Tesla, a lot of other companies are following it, because there is a need for a lot of business support. [for the employees]. “
Detroit, famous for being home to the American auto industry, is also emerging as a hub for electric vehicle technology, with major auto companies turning to electric and electric vehicle specific companies seeking to capitalize on the talents of city engineering.
“Ford and GM are coming out with great EV technology, and we are also seeing new technology and battery companies moving into the Detroit metro area,” said Doug Hardy of Signature Sotheby’s International Realty in Detroit.
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These newcomers are absorbed by an already strong market, which recorded a 16.8% increase in home sales in June and a 21.6% increase in median home prices from June of the previous year.
Real estate experts predict that the growing electric vehicle industry will help fuel pre-existing market trends, increasing competition and prices in the months to come, especially as many new tech workers come from more expensive housing markets and are willing to spend more.
“Overall, the market is already competitive, with low inventories and strong demand driving prices up,” said Chris Dickson, president of Piatt Sotheby’s International Realty in Pittsburgh. “Because these new buyers come from less affordable areas, they are more likely to push up the prices. ”
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How EV Tech is boosting real estate in the United States
As the electrical tech industry takes hold in cities like Austin, Pittsburgh and Phoenix, a common theme is that the influx of employees, many of whom are moving from more expensive parts of the country, are driving up house prices.
“Because Texas is still cheap compared to California, people come in and bid on homes well above the asking price,” Mr. Sudhoff said. “Houses were going to double their demand in certain prices – we’ve never seen anything like it. ”
The housing shortage, which is also pushing up rents, further exacerbates price appreciation in the Austin area.
Weak inventory has also fueled competition in the Detroit area, which is home to at least nine large EV companies, according to an analysis of three major EV ETFs by Mansion Global and the Dow Jones Market Data team. These companies are attracting new tech talent, and the city will host an EV tech exhibition in September.
“Last year people spent an awful lot of time at home and decided they wanted something with a bigger yard and offices, so we saw a lot of people move in,” Hardy told Detroit. “There is now little inventory and new, clean, and renovated homes seem to sell out almost immediately on the market. We had homes listed for $ 2 million that received five offers in two days.
Pittsburgh, meanwhile, is home to four major companies related to EV technology, including century-old manufacturing company Westinghouse, also increasingly known for its high number of EV charging stations, and new hires. The city’s technology is already entering a competitive housing market.
“We see a lot of well educated young employees coming from high cost areas, and they are excited to find that they can buy a nice home here,” Mr. Dickson said of Pittsburgh. “The market as a whole has been very competitive as it is, with low inventories and high demand driving prices up. ”
In Phoenix, which is also home to at least four major EV-related companies, a major challenge is the low supply of new developing properties that buyers in the tech industry tend to want.
“The demand for new housing has never been stronger, but we have had under-construction in our market for over a decade, so it will take some time to catch up,” said Dub Dellis, director of operations at Walt Danley Christie’s International Real Estate. at Phoenix. “We have seen an increase in requests for [homes with] two offices, large modular spaces and ultra high speed or gigabit internet service.
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Prospects for buyers in these cities
The new buyers who are flooding these markets arrive with high expectations. As tech workers from expensive cities, they prioritize properties with smart home features and luxury finishes. This drives up demand and prices in the high end, so luxury buyers need to prepare for the competition.
“For people in the tech industry coming from the West Coast, the expectations are much higher in terms of the level of finishes and the quality of the architecture,” said Mr. Sudhoff. “People are paying for these features, and the appreciation in the price has been an incredible thing.”
Typically, real estate markets experience a slowdown starting in the fall, but that may not be the case this year, given how the pandemic has disrupted ordinary routines.
“The housing market is more balanced than last year, but that doesn’t mean it will be easy for buyers. There is limited inventory and a decent number of buyers in the market, ”said Ms. Hale of realtor.com. “Buyers may be competing with one or two buyers instead of ten, so it’s still competitive, but not as much as summer or spring.” (Mansion Global is owned by Dow Jones. Dow Jones and realtor.com are both owned by News Corp.)
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Buyers should expect particularly strong competition for larger homes with room for multiple workspaces. Properties that require very few upgrades are also particularly in demand in all markets, with some buyers willing to pay extra for fully furnished homes.
“It’s an instant gratification real estate market,” Mr. Hardy said. “If the house needs to be repainted or the bathroom upgraded, buyers prefer not to spend the month doing it. ”
Flexibility is key for buyers who want to stand out from the frenzy of these markets fueled by electric vehicle technology, and some are making unusual offers in order to attract sellers.
“We’ve seen people forgo inspections,” Mr. Hardy said, “or offer homeowners free rent to stay in the house after it closes for a few months, just to make it more attractive.”
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