The EV Tech Industry Is Boosting Real Estate in Secondary Cities in the U.S.

The EV (electric/hybrid vehicle) technology industry is an increasingly powerful one in the U.S, with sales of electric vehicles growing faster than those of standard cars during the first half of 2021.. A new, massive infrastructure bill would also devote significant funds to the creation of EV charging stations, and investors are increasingly putting their money in EV exchange traded funds, or ETFs—indexes of companies creating electric, hybrid or autonomous vehicles, or the batteries these cars require. 

And as EV tech companies grow, real estate in many regions of the U.S. stands to benefit from the influx of new tech workers and local economic growth. Beyond Silicon Valley, there are burgeoning EV tech hubs in cities like Austin, Texas, Pittsburgh, Detroit and Phoenix. Brokers in these cities say that growing EV tech companies setting up camp in their areas have helped spur the property market, with increased demand driving up prices and speeding up the pace of sales. They anticipate that the industry in their regions will continue to exert a powerful influence over the real estate market in the months and years to come, as supporting companies move in to offer the particular products and services that tech employees demand. 

“New STEM [science, technology, engineering and mathematics] jobs tend to be in areas where a lot of people are already moving to because they have growing industries that are doing a lot of hiring,” said Danielle Hale, chief economist with realtor.com. “Even in a world where a lot of people are working remotely, they still like to locate to areas that are going to give them maximum employment options, particularly the relatively affordable tech hubs like Austin.”  

“It has had a significant impact on real estate,” said Jacob Sudhoff, CEO of the Texas region with Douglas Elliman.

“It’s like a gold rush in a way. People from California and the West Coast, New York and Chicago are all moving to Silicon Hills and the Austin area,” Mr. Sudhoff said, using the nickname for the hilly area of west Austin where there are many tech companies. “With Tesla moving in, a lot of other businesses follow it, as there’s a need for a lot of supporting businesses [for the employees].”

Detroit, famously home to the American auto industry, is now also becoming a hub for EV tech, with major auto companies shifting toward electric and EV-specific companies seeking to capitalize on the city’s engineering talent.

“Ford and GM are coming out with great EV tech, and we also see new tech and battery companies moving into metro Detroit,” said Doug Hardy of Signature Sotheby’s International Realty in Detroit.

These newcomers are being absorbed into an already strong market, which in June saw a 16.8% increase in home sales and a 21.6% increase in median home prices compared to June of the previous year. 

Real estate experts anticipate that the growing EV industry will help fuel pre-existing market trends, increasing competition and pricing in the months to come—especially because many of the new tech workers are coming from more expensive housing markets and are willing to spend more. 

“Overall, the market is already competitive, with low inventory and high demand driving up prices,” said Chris Dickson, president of Piatt Sotheby’s International Realty in Pittsburgh. “Because these new buyers are coming from less affordable areas, they’re more likely to be pushing prices up.” 

How EV Tech Is Boosting Real Estate Across the U.S. 

As the EV tech industry moves into cities like Austin, Pittsburgh, and Phoenix, a common theme is that the influx of employees—many of whom are relocating from more expensive areas of the country—are driving up housing prices. 

“Because Texas is still cheap compared to California, people are coming in and bidding for homes for well over the asking price,” Mr. Sudhoff said. “Homes were going for double their ask in certain price points—we’ve never seen anything like that.” 

Further exacerbating price appreciation in the Austin area is a shortage of housing stock, which is sending rents soaring, as well. 

Low inventory has also fueled competition in the Detroit area, which is home to at least nine major EV-related companies, according to an analysis of three major EV ETFs by Mansion Global and the Dow Jones Market Data team. Such companies are bringing in new tech talent, and the city will host an EV tech expo in September. 

Last year, people spent an enormous amount of time at home and decided they wanted something with a bigger yard and office space, so we saw a lot of people moving in,” said Mr. Hardy in Detroit. “There’s low inventory now, and clean, renovated, new houses seem to sell with almost zero time on the market. We’ve had homes listed for $2 million get five offers within two days.”

Pittsburgh, meanwhile, home to four major firms related to EV technology, including century-old manufacturing firm Westinghouse, is also becoming well-known for its high number of charging stations for electric vehicles, and tech employees new to the city are entering an already-competitive housing market.

“We’re seeing a lot of young, well-educated employees coming in from high-cost areas, and they’re thrilled to figure out that they can buy a nice home here,” Mr. Dickson said of Pittsburgh. “The overall market has been highly competitive as it is, with low inventory and high demand driving up prices.”

In Phoenix, also home to at least four major EV-related companies, a major challenge is a low supply of new development properties that buyers from the tech industry tend to want.

“The demand for new homes has never been stronger, but we have under built in our market for more than a decade, so it will take a while to catch up,” said Dub Dellis, chief operating officer at Walt Danley Christie’s International Real Estate in Phoenix. “We have seen a surge in requests for [homes with] two offices, large flexible spaces and ultra-high-speed or gigabit internet service.”

Outlook for Buyers in These Cities 

The new buyers flooding these markets are arriving with high expectations. As tech workers hailing from expensive cities, they are prioritizing properties with smart-home features and luxury finishes. This is driving up demand and pricing at the high end, so luxury buyers should prepare for competition. 

“For people from the tech industry coming from the West Coast, the expectations are much higher in terms of the level of finishes and quality of architecture,” Mr. Sudhoff said. “People are paying for these features, and the price appreciation has been an amazing thing.” 

Typically, real estate markets experience a cooldown beginning in the fall, but that may not be the case this year, given how the pandemic has upended ordinary routines. 

“There’s more balance in the housing market than last year, but that doesn’t mean it’s going to be easy for buyers. There’s limited inventory and a decent amount of buyers on the market,” Ms. Hale at realtor.com said. “Buyers may be competing against one or two buyers instead of ten others, so it’s still competitive, but not as much as summer or spring.” (Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp.)

Buyers should anticipate particularly strong competition for larger homes with room for multiple work spaces. Properties that require very little upgrades are also in especially high demand across markets, with some buyers willing to pay a premium for homes that come fully furnished.

“It’s an immediate-gratification real estate market,” Mr. Hardy said. “If the house needs to be painted or the bathroom upgraded, the buyers would rather not spend the month doing that.”

Flexibility is key for buyers who want to stand apart from the frenzy in these EV tech-fueled markets, and some are making unusual offers in order to entice sellers.

“We’ve seen people waiving inspections,” Mr. Hardy said, “or offering free rent to the owners to stay in the house after closing for a couple months, just to make it more attractive.”