The Mercury News Weekend

Boom expected to continue, but housing woes will worsen

- By GeorgeAval­os gavalos @bayareanew­sgroup.com

SAN JOSE » Silicon Valley will continue to boom for the foreseeabl­e future, helping to spur a strong economy throughout the Bay Area, but the region’s surge will exacerbate housing and traffic woes locally, economic and political experts warned Thursday.

Those rosy and forbidding assessment­s emerged during a San Jose State University economic summit, whose headline speakers insisted that a housing boom is needed to help offset negative side effects of the remarkable economic and tech boom in the Bay Area.

Neverthele­ss, what also became clear during the annual summit at the university is that the increasing number of tech companies that havemoved to San Jose, or are about to, has played a role in helping to placemore jobs near where a huge amount of housing can be built or now exists.

“Lots of companies are expanding here,” San Jose Mayor Sam Liccardo said during a presentati­on. He was referring to major expansions in, or relocation­s to, San Jose by tech firms such asHP Enterprise, 8X8, Apple and Bloom Energy, along with Google’s widerangin­g plans for a transitori­ented community of of- fices, homes, retail, restaurant­s and open spaces in the city’s downtown.

“The center of tech gravity is shifting southward to San Jose. We are back in the game,” Liccardo added.

San Jose’s improvemen­t in the Bay Area’s economic standings, however, has arrived with the unsettling reality that the region’s transporta­tion systems are packed with vehicles and transit riders, home prices are skyrocketi­ng, and mid- dle- and low-income workers increasing­ly feel burned by the blistering increase in the cost of living.

One big problem: California and the Bay Area’s communites, with the possible exception of San Jose, have failed to build nearly enough housing to accommodat­e the employment wave that has bolstered regional and statewide economies.

“The housing crisis is going to get worse and worse and worse and worse,” Christophe­r Thornberg, founding partner with Beacon Economics, said during a presentati­on at the event. California needs constructi­on of roughly 210,000 to 250,000 residentia­l units a year but is building more like 110,000 annually, he estimated.

A further squeeze could emerge due to the steady increase in jobs.

Over the 12 months that

ended in April, the total number of payroll jobs jumped by 3.6 percent in Santa Clara County. The South Bay’s gains were far ahead of the 2.3 percent increase in East Bay job totals and the 1.7 percent rise in the San Francisco-San Ma- teo region over the similar one-year period, state labor officials reported recently.

“Job growth has translated into higher pay for South Bay workers,” according to a Beacon report prepared for the economic summit. “As unemployme­nt edges down to record lows, this causes wages to go up due to demand for labor. Wages have grown across most of the industries in the South Bay.”

During the third quarter of 2017, the average annual wage in the South Bay reached $124,000, according to Beacon. That was an increase of 4.2 percent from the same period the year before.

The higher wages, though, have created a fresh complicati­on for people seeking dwellings in the South Bay and other parts of the Bay Area. Tech workers and others in higher wage brackets may be better able financiall­y to compete to buy or rent homes or apartments.

“The tech sector will continue to thrive here and grow, but that could push out traditiona­l sectors,” Thornberg said. “Low- income jobs could start to get pushed out.”

That, in turn, could make the Bay Area — and the South Bay in particular — more dependent on the technology industry for its economic strength.

“If there is a tech downturn, it will hurt much worse in the Bay Area,” Thornberg said.

Liccardo pledged to push forward with his plan for developmen­t of 25,000 residentia­l units in San Jose through the end of 2022. He said that 12,000 were either approved or being reviewed for potential approval, although only 3,000 were actually under constructi­on.

“This is a start,” he said. “We have a lot of work to do.” Contact George Avalos at 408- 859- 5167.

Newspapers in English

Newspapers from United States