When Apple Employees Move In, Housing Prices Go Up
San Francisco still hasn't found a balance between economic growth and affordable homes.
This week, investors are eagerly awaiting Apple’s earnings report, which comes out on Tuesday. But for those in the Bay Area who don’t own Apple shares, favorable revenues still signify something important: Housing prices might be going up soon.
A Wall Street Journal report on housing prices looked at neighborhoods in San Francisco and San Jose with high proportions of Apple employees to see whether they drive up home prices nearby. Using Census data and housing statistics from Zillow, the report concluded that the prices in neighborhoods where workers at Apple’s Cupertino headquarters tend to live rise much faster—especially when the company’s doing well.
In 2010, the difference between the price of the median Apple worker’s home and the median San Franciscan’s home was about $150,000 in 2010. This year, it is close to $400,000. The Journal only studied this phenomenon for Apple employees because running the same analysis for other companies was too resource-intensive. Apple’s employees obviously aren’t singlehandedly responsible for these changes, but they are emblematic of other tech companies’ workers’ presence in the city.
The median household income in San Francisco County is $75,604, but according to one report, tech workers in the Bay Area have a median wage of over $123,000. The tech industry has been credited for 30 percent of the San Francisco’s job growth since 2010, with tech employees making up an estimated 8 percent of workers in the city in 2013.
This highlights two main facts that should guide the way cities think about affordable housing. First, income inequality is not only more pronounced in cities compared with the U.S. overall—there’s evidence that the gap is widening. A Brookings report found that the top incomes in San Francisco far exceed those of any other U.S. city, and that the city ranked second to Atlanta as the most unequal city in the country.
Second, unless certain safeguards are put in place, rapid economic growth often brings with it spikes in housing prices and cost of living. It’s an important question to consider as every major city in the world vies to have a vibrant tech scene to boost its economy. “The findings offer a cautionary tale… While high-salaried tech workers might be able to afford homes, people in other industries might have a tough time competing,” wrote the Journal’s Laura Kusisto.
A similar debate is happening in Boulder, Colorado, where there are concerns that a growing tech sector will erode cheap housing options. There, the issue not only affects those looking for affordable places to live, but also means that other industries could see limited job growth if life is too expensive for non-tech workers. The lack of supply is also driving prices up—and while some developers will designate a certain percentage of each building’s units as affordable, that’s still not enough to meet the demand.
Solutions aren’t easy, but some do exist. In Los Angeles, mayor Eric Garcetti has announced plans to charge developers a fee that would go towards affordable housing. And in Texas, one group has found a solution in community land trusts, which prevent lots from being sold to a developer, so that homes that sit on them will remain affordable.