One strange thing about the house prices is that people can opt out, especially in the US. You don't have to live in expensive places. You can live in perfectly nice places where house prices are 30%. One would have thought that the internet would have eased some pressure on the most desirable addresses, but the discrepancy seems to be getting sharper.
Another way of putting it is that if house prices are harming innovation, you would see more entrepreneurship in lower cost of living locations.
While the internet does make location irrelevant for a lot of purposes, there is value in being in an area with lots of other technology people. Even Superman moved from Smallville to Metropolis. :)
Another way of putting it is that if house prices are harming innovation, you would see more entrepreneurship in lower cost of living locations.
Correlation != causation.
Right now, location still matters a great deal. People are just mobile enough to stratify in their 20s (ambitious people move to the star cities) but not enough to render location obsolete outright.
In the Bay Area and New York, you have a continuous/liquid job market. If you're a startup that needs to hire a Scala expert with knowledge of 3 specific NoSQL databases, and you need to hire that person in two weeks, you can find such a person in the Bay Area, for a price. In Minneapolis, there are a lot of talented people, sure, but there isn't the critical mass that allows you to have ridiculous AND-ing in your requirement query. The same goes in job searching. You might have to choose between your location and your speciality.
The appeal of the star cities is the continuous, liquid market. For build-to-flip startups that grow rapidly and reallocate huge amounts of money without doing much, the second-tier cities just aren't an option.
The appeal of the star cities is the continuous, liquid market. For build-to-flip startups that grow rapidly and reallocate huge amounts of money without doing much, the second-tier cities just aren't an option.
In which case I think it's the build-to-flip "businesses" that deserve to die rather than the "second-tier" cities.
But what do I know? I live in a "second tier" city with its own Google, Microsoft, and Intel R&D labs alongside the nation's Institute of Technology. Somehow we're still considered second-tier and every freaking start-up still locates itself in the city 1 hour's drive south from here with Boston-scale housing prices in a country of Minneapolis-scale salaries.
Another way of putting it is that if house prices are harming innovation, you would see more entrepreneurship in lower cost of living locations.