Even for those making top dollar, the exorbitant prices one has to pay for housing in the Bay Area must surely leave one with a sinking feeling. That feeling is of your wallet or purse strings emptying.
It is a very deep irony that arguably the wealthiest metro area, in the richest nation on earth, is unable to provide adequate affordable housing for its citizens.
Household Median Income rankings in the U.S.
Santa Clara County - $93,500(1st)
San Francisco/East Bay/San Mateo/Marin - $75,900 (4th)
Napa County - $72,100 (7th)
Santa Cruz County - $61,500 (11th)
With median rents in San Francisco at an eye-watering $3,500 per month, it’s safe to say that the city is outrageously expensive, even for its relatively wealthy inhabitants. Globally, the Bay Area ranks as among the most unaffordable - with median housing prices at roughly 9.2 times the median income (Only Sydney, Vancouver and Hong Kong do worse). If its any consolation, at least we're not Hong Kong.
If middle-class workers are struggling to find suitable housing, the situation can only be described as dire on the lower end of the economic scale.
A confluence of factors have conspired to render affordable housing out of reach for the majority. For one, the Bay Area's restrictive land use policies, not just limited to San Francisco, make new developments more expensive and rolled out much slower than otherwise. Many (but not all) of these restrictions are nothing more than entrenched NIMBYism. Furthermore, when new developments break, they unfortunately disproportionately target the very upper end of the market. Building of luxury apartments is the norm (by one measure in San Francisco, since 2007, 189% of demand for luxury housing has been met by new developments versus 18.9% of needed middle class housing). Meanwhile, strong tenant protections and rent controls have, in the absence of robust social housing construction, further accelerated prices in the rest of the market.
Finally, global economic trends - including ultra-low interest rates and capital flight from emerging markets like China have added fuel to the fire.
Even if wages for workers in the tech sector can keep going up, it is clearly economically inefficient to see such large chunks of paychecks going, literally, to the rentiers. The crazy real estate prices are limiting the positive multiplier effect that the tech boom should be feeding through to the local economy.Furthermore, the national economy as a whole is negatively impacted, by limiting the number of workers who can migrate to the most productive locales. One estimation is that U.S. GDP would be 9.5 percent larger if the major productive centers - think New York, San Francisco had been able to expand affordable housing sufficiently to attract workers. Instead, workers are drawn to cheaper, yet much more unproductive areas of the country.
For a region that prides itself on being on the cutting-edge of global innovation, it is imperative that the tech community begin debating these issues seriously and work with local governments to craft a credible response.
We need to find long-term fixes, soon.
This is a conversation I want to continue having.
A selection of #RentIsTooDamnHigh tweets on S.F.
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