DURHAM – With news breaking this week that Meta, the parent company of Facebook, may be opening an office in the Triangle and is already hiring for some roles, social media sites have been ablaze with comments from those already living in the region.
That includes the social media site Facebook, of course, where some are pleased to see yet another member of FAANG choose the region as an employment center for its workers and others are upset that the arrival of more high-paying high-technology jobs will change the local economy for those already living here struggling to compete for jobs and housing.
“Bringing high skill workers to region creates ‘network effects’ where they interact with other high skilled workers which increases innovation and also draws in other high skilled workers and firms,” said Dr. Gerald Cohen, chief economist at the Kenan Institute, in an interview with WRAL TechWire.
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And while Meta’s decision may be related to, or perhaps a result of, decisions from Apple and Google, where details are known and announced, to locate facilities in the region, said Cohen.
Economists often call this a “virtuous cycle,” said Cohen. “So, Meta workers may want to partner with UNC researchers which will benefit both the workers and institutions and educates more high skilled workers which feeds the cycle.”
This clustering of talent in a region can reinforce networks, said John Quinterno, a professor at Duke University, in an interview with WRAL TechWire. “There will be winners and losers.”
There are other impacts of high-skilled workers coming into the region, said Cohen. For those who relocate to the area from out of the region, they’ll move into new residences, and thus may add money into local economies in the long-term through consumer spending at restaurants, shops, entertainment venues, and more.
But there are negative effects, potentially, when large employers announce a facility.
“It is naïve to think that a rising tide will magically lift all boats,” said Quinterno.
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Impact on housing
Economic growth in the Triangle has not been limited to these technology companies, nor has it been limited to just the prior two years.
Think of the growth that occurred as Research Triangle Park was first established, and the growth in the region at the turn of the millennium.
“Our area handled economic growth fairly well in the past when there was more open land available for residential development, but the economic growth has now become supersized and I don’t see that housing availability is keeping pace,” said Dr. Anne York, a professor of economics and program director at Meredith College, in an interview with WRAL TechWire.
A Durham-based real estate agent told WRAL News this week that a doubling of home sale prices in the next five to ten years is not out of the question.
“Buying a house today when a median house costs around $400,000, I think it’s safe to say that will be worth double in the next five to 10 years,” Matt Lunceford Blivin, a North Carolina licensed real estate agent and REALTOR® who works with Nest Realty, told WRAL News this week.
Triangle is growing FAANGS as big tech seeks to feast on region’s talent, benefits
Relocation already driving up home, rent prices
Cohen noted that the region is already seeing signs that economic development announcements are changing the local economy. That’s especially true in the housing market, said Cohen, “as people who are relocating to the Triangle are buying in advance of their moves.”
The Triangle’s real estate market has seen a skyrocketing of median home sale prices in the prior 12 months, and in the prior 24 months. One measure of housing affordability, an index that compares the cost of purchasing a median priced home bought at prevailing interest rates for a 30-year mortgage, is at an all-time low, according to the latest release from Triangle Multiple Listing Service, TMLS.
Those announcements may also be impacting decisions that developers are making, whether they’re building housing units that will go to the for sale market or housing units and apartments that will be tenant-occupied rentals, said Cohen.
“One downside is lower housing affordability which creates challenges for lower income households,” said Cohen. “And if people try to move out of the Triangle to find lower cost housing, high gasoline prices make commuting a challenge.” Raleigh was recently ranked the 10th best city for commuting workers. But that could change should gas prices continue to rise and workers face longer and longer commutes, Cohen noted.
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What can be done?
“If we are using tax incentives to lure businesses to relocate here, then where are the tax incentives for residential developers to be able to build more affordable housing that is close to these jobs,” said York.
Because homes are often a family’s most valuable asset, said York, upward mobility for families and households starts when equity can be built while living inside so-called “starter homes.”
“We need to be able to provide that cycle of wealth creation through home ownership, including condominiums and townhomes, but that cycle is cut off when families have to rent to find affordable shelter,” said York.
“It is urgent that government help builders build more housing that is meant for home ownership instead of more rental units,” said York.
And perhaps there are changes that could be made in this regard. Cohen told WRAL TechWire that policy makers “need to think about developing plans to insure affordable housing.”
Programs that could incentivize building affordable housing alongside higher priced or market rate units would be one approach, suggested Cohen.
Other changes that could go into effect would be changing zoning ordinances to shift density requirements or allow more small multifamily properties in residential communities.
And, as the Triangle grows, investing in public transportation and communities that are in close proximity to access points could assuage pricing challenges that some residents might feel, suggested Cohen.
Triangle is growing FAANGS as big tech seeks to feast on region’s talent, benefits
