Pretty sure there must be affordable small towns in the US without SW engineers to drive up the cost of everything.

But your point is rather poor. Those US SW engineers might cause local gentrification, but they also contribute a huge amount in state and government taxes, taxes that I'm sure the likes of Germany would also like to collect if they could, to fund their welfare, education, army, healthcare, etc.

And it's not like many large German cities aren't already gentrified and overpriced despite wages being lower than the US. Try moving to Münich, Stuttgart, Frankfurt, Hamburg or Berlin, look at real estate market then at the local wages. It's the same disease everywhere.