Homeownership is more than a dream for software engineers in these major U.S. metros
New insights from LinkedIn and Redfin show where software engineers can afford to buy a home
The idea of affordable housing and San Francisco are about as compatible as oil and water. Despite tech’s insatiable appetite for software engineering talent driving median salaries to nearly $200,000 a year, it remains nearly impossible for people to afford to purchase a home in a market where the median prices have reached nearly $1,400,000.
For those that want to purchase their own slice of the American Dream, there is hope. New data from LinkedIn and Redfin - the technology-powered real estate brokerage - shows that Charlotte, North Carolina and Buffalo, New York have emerged as two “hidden gem” locations for those who want to grow their careers as software engineers and purchase property they can call home.
According to the data, instead of devoting more than 40% of their salary to pay for a home in San Francisco, software engineers in Buffalo will find that housing costs account for approximately 13% of their income on mortgage payments. Similarly, Charlotte-based engineers will only have to earmark 18.9% of their salaries to pay for a home. At the same time while job growth in San Francisco is strong at 3.5%, the job growth and opportunities in Charlotte and Buffalo for software engineers remain very healthy at 4.1% respectively.
Here is a snapshot of the key findings from the joint report:
Metros with strong job growth and affordable housing for software engineers
|U.S. Metro||YoY talent pool growth for software engineers||Median income for software engineer||Median home-sale price||Monthly housing payment for median-priced home||Percentage of income necessary to afford median-priced home||Share of affordable homes for sale|
|Grand Rapids, MI||3.7%||$70,000||$217,000||$1,014||17.4%||64.7%|
|Colorado Springs, CO||3.4%||$87,000||$320,000*||$1,496||20.6%||52.6%|
|San Francisco Bay Area, CA**||3.5%||$186,300||$1,420,000||$6,637||42.8%||21.5%|
*Median home-sale price for El Paso County, Colorado, where Colorado Springs is located
**Talent pool growth and income data is for the Bay Area as a whole; home-sale price data is for the San Francisco metro area only
This analysis was created by identifying median salaries and talent pool job growth for software engineers in 20+ U.S. cities over a one year period (January 2018 - January 2019) using LinkedIn data. We measure talent pool growth by comparing the number of LinkedIn members holding a software engineer position in each city in January 2018 and January 2019 while taking into account overall growth among LinkedIn members in the city.
Housing affordability in each metro is based on Redfin data from sales in July 2019. We calculated the total monthly housing payment based on a mortgage interest rate of 3.82% and a property tax rate of 1.125%, then multiplied the monthly housing payment by 12 months to determine the annual housing payment. To determine whether a software engineer’s salary is sufficiently high to afford a median-priced home in a certain metro area, we used the rule that homes are affordable only if they cost less than 30 percent of gross income.
The share of homes for sale affordable on a software engineer’s salary in each metro is based on data from Redfin’s housing affordability dashboard, which allows users to quickly understand how affordable homes are in a given area and compare affordability among different parts of the U.S. To calculate affordability, the dashboard takes into account household income, down payment percentage, mortgage interest rate, mortgage length and property type. For this report, we used a 20% down payment, 30-year mortgage and 3.82% mortgage rate. You can check out the housing affordability calculator in the Redfin Data Center.