For years, Homes of Silicon Valley has been reporting data and trends related to the inventory shortage. This week, we are turning our focus to the driving force behind the continued lack of units to meet housing demand: the jobs to housing ratio. Below you will find some recent facts and figures that demonstrate what a balanced market looks like, compared to what the Bay Area has been facing for the last decade and beyond.
BUILDING INDUSTRY ASSOCIATION STATS
By mid-2017, the Bay Area added 42% of all new jobs projected through 2040 yet had approved 30% fewer homes than what was needed to keep pace with related household projections.
Since 2011, the Bay Area has added 531,400 new jobs but permitted 123,801 new housing units.
The resulting ratio is 4.3 jobs per housing unit; a healthy balance is 1.5 jobs per housing unit.
MANHATTAN INSTITUTE/REPORTED BY SF CHRONICLE
San Francisco/Oakland/Hayward: 3.5 jobs per housing unit
San Jose/Sunnyvale/Santa Clara: 3.2 jobs per housing unit
Denver, CO: 1.7 jobs per housing unit
Austin, TX: 1.5 jobs per housing unit
Seattle, WA: 1.43 jobs per housing unit
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The Voice of Affordable Housing takes the job creation data one step further and states that the historic benchmark of a 1:1 jobs housing balance is not reflective of true units needed. According to this non-profit organization, 1 high-income job creates the need for 3 or more low-income jobs, resulting in a total housing need for 4 workers.
While the solutions behind housing creation could be a whole other blog (and very well might be someday here at HOSV!), the take-a-way is that the imbalance of housing units per jobs created is very real in Silicon Valley compared to other metros. The trends we will be following pursuant to this reality are:
| Will migration patterns in other developing tech metros create similar housing imbalances in the years to come?
| Will easing permit processes, re-zoning underutilized or vacant parcels & proactively creating affordable housing be ‘enough’ to start to close the gap in the Bay Area in our lifetime?
| Will remote work trends initiated during the pandemic evolve into a measurable long-term job housing balance solution?
(For the purposes of real estate, we have focused strictly on the need for housing units. We would like to acknowledge that we should all be aware of related public policy needs in the present and future to address infrastructure such as traffic, transportation, utilities, etc.)
Long story short: Housing demand will not disappear overnight, and current new construction will not be enough to compensate for the demand in a manner that will ‘fix’ the growing problem. If you currently own a home in Silicon Valley – congratulations! If not, please let us know if we can help you strategize a path to enter this challenging and job-driven market.
All my best,
Mark / Homes of Silicon Valley, A Sereno Division
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