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10 cities in danger when the tech bubble finally bursts

GOBankingRates Logo By Andrew DePietro of GOBankingRates | Slide 1 of 11: The great housing bubble and crash are now a decade in the past, and across the U.S., home values have more than recovered. Many U.S. cities have even surpassed their housing bubble peaks. This is especially true of cities that are major hubs of the tech sector.
As the tech sector runs into troubled waters on the stock market, it raises questions of the stability of housing markets in cities dominated by tech employment. GOBankingRates sought to determine which cities might be particularly vulnerable if the tech sector continues to decline. The study evaluated the 112 most populous U.S. cities in which tech is the primary employer, analyzing the percentage of the population employed in tech, the difference in employment between tech and the second-largest employer, and price-to-rent ratio, along with supplemental data on mortgage and rent affordability.
It’s important to understand the price-to-rent ratio of homes in a city, which is calculated by taking the estimated home value and dividing by its estimated monthly rent price times 12. This measure serves as a metric of affordability for renting versus buying, as well as an indicator of other developments. For instance, lower ratios indicate that buying is cheaper, whereas higher ratios signify that renting is a better deal. Price-to-rent ratios tend to rise during a bubble as speculative interest in homebuying lifts home prices. Keep reading to find out which cities are in the most danger if the tech bubble bursts.

If the tech bubble bursts, these cities could be hit hardest

The great housing bubble and crash are now a decade in the past, and across the U.S., home values have more than recovered. Many U.S. cities have even surpassed their housing bubble peaks. This is especially true of cities that are major hubs of the tech sector.

As the tech sector runs into troubled waters on the stock market, it raises questions of the stability of housing markets in cities dominated by tech employment. GOBankingRates sought to determine which cities might be particularly vulnerable if the tech sector continues to decline. The study evaluated the 112 most populous U.S. cities in which tech is the primary employer, analyzing the percentage of the population employed in tech, the difference in employment between tech and the second-largest employer, and price-to-rent ratio, along with supplemental data on mortgage and rent affordability.

It’s important to understand the price-to-rent ratio of homes in a city, which is calculated by taking the estimated home value and dividing by its estimated monthly rent price times 12. This measure serves as a metric of affordability for renting versus buying, as well as an indicator of other developments. For instance, lower ratios indicate that buying is cheaper, whereas higher ratios signify that renting is a better deal. Price-to-rent ratios tend to rise during a bubble as speculative interest in homebuying lifts home prices.

Click ahead to find out which cities are in the most danger if the tech bubble bursts.

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