Gap between housing and job growth in Silicon Valley widens

Large gap between job and housing growth is reportedly widening

SANJOSE » Silicon Valley remains the nation’s leader in tech job creation, but the region’s innovation economy is imperiled by inade- quate levels of housing construction, skyrocketing home prices and a migration of residents to other states, according to a report released Thursday.

“The gap between job and housing growth is large and widening,” stated the 2018 report by the Silicon Valley Competitiveness and Innovation Project, which is headed by the San Jose-based Silicon Valley Leadership Group.

From 2010 through 2016, the number of payroll jobs in Silicon Valley increased 29 percent— but the total number of housing units in the region rose a feeble 4 percent. Silicon Valley’s population rose just 8 percent over that period, an indication that a growing number of people are commuting to work from outside of the area.

The report defines Silicon Valley as Santa Clara County, San Mateo County and San Francisco.

In 2016, Silicon Valley per- formed well compared to its rival innovation hubs.

“We are growing faster than any other competitor region,” said Carl Guardino, president of the Silicon Valley Leadership Group. “Against all odds, employers still want to invest in high- cost Silicon Valley.”

Silicon Valley’s total jobs in its innovation industries jumped 5 percent in 2016. During the same year, tech jobs increased 4 per- cent in Seattle, 3 percent in both Southern California and Boston, 2 percent in New York City and 1 percent in Austin, Texas.

“Some of the iconic brands in Silicon Valley are doubling down on this region, despite the high housing costs,” said Brian Brennan, a senior vice president with the Leadership Group.

Yet the pace of employment gains appears to have crested in

the tech sector — not just in Silicon Valley, but nationwide. During 2015, technology employment zoomed 8 percent higher. Among the rival innovation hubs, only Seattle showed stronger growth in 2016 compared with 2015.

The year 2016 was the most recent full year of available data culled from federal labor statistics, which were analyzed by Palo Alto-based Collaborative Economics.

Despite the sturdy employment gains, the sheer lack of housing remains the most formidable hazard that can jeopardize Silicon Valley’s booming economy.

“We still haven’t cracked the housing nut,” said Brennan. “The gap is really growing between Silicon Valley’s housing stock and our job base.”

Silicon Valley’s median housing costs — a blend of home prices and apartment rental rates — rocketed 10 percent higher during 2017, rising faster than most other innovation hubs. Home prices rose 9 percent in Seattle, 6 percent in Austin, 5 percent in New York City, 4 percent in Boston and 3 percent in Southern California.

Traffic is becomingworse in Silicon Valley at a much faster pace than other tech hubs.

From 2010 through 2016, average commute times soared 18.9 percent in Silicon Valley. Over the same period, commute times rose 14 percent in Seattle, 8.2 percent in Southern California, 7.7 percent in Boston, 7.1 percent in Austin and 6.3 percent in New York City.

“An average Silicon Valley commuter now spends 72 minutes commuting per day, round trip,” the report stated. “This figure has grownmarginally since last year and remains second only to the commute time of New York City workers, who spend 74 minutes commuting.”

In response to the woes, people may have simply decided to pack up and flee.

During 2016, Silicon Valley and several other innovation hubs experienced a net exodus of residents, accord- ing to U.S. Census Bureau population estimates.

Silicon Valley during 2016 endured an exodus of an average 42 residents a month, a figure derived from a departure of 2,548 Silicon Valley residents a month to other parts of California and other states, and an inflow of 2,506 people a month to Silicon Valley from foreign countries.

The exodus from two other tech hubs was far worse. Southern California lost a net of 2,257 residents a month, while New York City lost 4,615 a month during 2016.

In contrast, Seattle gained an average of 4,198 residents a month, Austin gained 3,356, while Boston gained 1,227 residents a month, the report determined.

“We are having success here because of a combination of great colleges, venture capital investment and a talent pool and entrepreneurial spirit that is the world leader,” Guardino said. “But we can’t rest on our laurels and expect that success is a birthright. We have to fight for success every day.”