Silicon Valley has the highest housing costs in the U.S.

It’s the best of time and the worst of times in Silicon Valley, at least according to Joint Venture Silicon Valley, a regional think-tank that issued its annual Silicon Valley Index last week.

The 2019 index, a “comprehensive report based on indicators that measure the strength of our economy and the health of our community,” describes the Valley as materially successful but fundamentally anxious, as new wealth puts additional stress on those most vulnerable.

The report defines Silicon Valley as a broad region encompassing parts of Santa Clara, San Mateo, and Alameda Counties, ranging from Daly City to Union City to Gilroy to Scotts Valley.

The index includes some data from San Francisco for context but does not include the city as part of its larger regional definition. Most of the data covers 2017, with some references to 2018 as well.

Here are some of the conclusions from this year’s analysis:

On average, Silicon Valley is incredibly wealthy.

“The average annual earnings in Silicon Valley reached $140,000 in 2018, a level significantly higher than the state ($81,000) and the nation ($68,000). The number of high-income households (earning $150,000 or more) in Silicon Valley and San Francisco rose by 35 percent over the past four years, while the number of lower-income households declined.” The Valley’s unemployment rate is at an 18 year low.

But that money doesn’t go as far given the region’s suffocating cost of living.

Citing figures from the U.S. Census, the index calculates that the San Jose/Sunnyvale/Santa Clara area’s monthly average housing costs are the highest in the U.S. at an estimated $2,341 per month. The SF/Oakland/Hayward area comes in second with $2,059 per month. Note that these would both be higher at current market costs, but the census includes older homes and rent controlled areas that bring the median down.

Photo by Uladzik Kryhin/Shutterstock

Home prices remain high and inventory is low.

“Median home sale prices in Silicon Valley skyrocketed in 2018, reaching nearly $1.2 million—and the share of potential first-time homebuyers that could afford a median-priced home declined. The inventory of homes on the market has remained relatively low, as has the total number sold each year.”

Affordable housing development across the region is dismal.

“Affordable housing units approved in fiscal year 2017-18.” For context, that’s just eight percent of new units approved, compared to 16 percent in 2015 and 23 percent in 2010.

Also of note: “Local housing affordability issues are being exacerbated by inadequate new residential development. Although a large number of units have been built over the past two years, they have not made up for the lack of building over the prior decade; and, new residential building is predominantly for high-income residents, with only 8 percent of newly approved residential units affordable to those earning less than 80 percent of the area median income.”

The wealth is not falling equally.

The top two percent of Silicon Valley earners control 27 percent of the region’s wealth. While this is less striated than the U.S. at large—where in 2017 the top one percent controlled 40 percent of all the country’s wealth—the index notes the marks of regional poverty and economic distress: “37 percent of our students receive free or reduced-price meals. Ten percent of Silicon Valley residents lack consistent access to food that is nutritionally adequate. Thirty percent of Silicon Valley households rely on public or private, informal assistance in order to get by.”

Population inflow is constant, but growth has stalled.

“Silicon Valley’s population growth has slowed over the past three years—down to less than half the rate of growth experienced during the previous five-year period. [...] For the third year in a row, people are moving out of Silicon Valley nearly as quickly as they are moving in.”

Immigration is still transforming communities—and industries.

“The share of foreign-born residents has increased by nearly three percentage points since 2009, reaching 38 percent in 2017 (compared to 27 percent in California and 14 percent in the US). [...] Only 17 percent of Silicon Valley workers in highly technical occupations come from California. Forty percent come from India or China, and 29 percent are from other countries.”

For more, you can find the full 2019 index here.

• 2019 SV Index [Joint Venture SV]
• US One Percent Owns Two-Fifths [Independent UK]