San Francisco's tech boom has left low-income residents priced out of housing
With the divide between the rich and poor increasing, average room rents for a two-bedroom apartment are $3,700
In San Francisco, far from the picturesque, winding streets in the hills, a glistening skyscraper represents how the country's tech titans have transformed the city - and made it one of the world's most expensive places to live.
The figures are mind-boggling: average monthly rent for a two-room apartment in the city by the bay now runs to $3,700, the highest in the United States.
And a household of four with annual earnings of less than $117,400 is officially considered "low income".
Want to go visit the Facebook headquarters in the close suburbs? It'll take you two hours to go 30 miles (45 kilometres) either in the day or night.
The Salesforce Tower - named for a cloud-based software company - now dominates the skyline. Each day, huge buses transport tech workers to the suburban offices of Facebook, Google and Apple.
All this wealth has sent real estate prices soaring across the Bay Area - from Silicon Valley in the south to Oakland in the east - and widened the rich-poor divide in a striking way.
Thousands of shabbily dressed homeless people wander along Market Street, one of the city's main shopping thoroughfares, not far from the headquarters of Uber and Twitter - as Teslas and Maseratis zip by.
With rent so high, some have taken to living in their cars, like Elizabeth V, a 59-year-old who works up to 16 hours a day as a security guard at one of the tech company buildings.
She earns just $2,800 a month - not nearly enough to pay for housing for herself and her disabled brother.
"I guess we're kind of invisible because people don't think of us when they think of Silicon Valley. They think of the small minority of engineers that earn a ton of money," says Elizabeth, who wakes up every morning in her car - filled with clothes and boxes of food - in a parking lot in San Jose, in the heart of the tech corridor.
Cary McClelland, whose 2018 book Silicon City examines how the area has changed, says: "We see now a kind of homelessness that did not occur before - people who work, that is new."
Whether talking to politicians, housing experts or residents, everyone agrees that even though San Francisco - built on a peninsula - has always had housing problems, the situation has become far worse since the tech boom of 2012.
According to the Paragon real estate group, the average price of a house in San Francisco shot up from $670,000 in early 2012 to $1.6 million at the start of 2018.
With the influx of tens of thousands of "techies" - software designers, programmers and engineers - whose salaries easily start at $100,000 a year and go up from there, the cost of living rose quickly.
That triggered "skyrocketing evictions in the city ... a huge number of businesses had to close," along with cultural institutions and non-profits, says Mr McClelland.
"After the great recession (2008-2011), with so little place for investment capital to go elsewhere in the economy, so much of it came here and overheated the city," he adds.
Servane Valentin, a French real-estate agent, recalled that as of 2012 and 2013, "we saw young 'geeks' in their 20s and 30s arriving with much higher salaries and had no idea about money."
"They were ready to pay $2,000 for a studio," a price far above the market value, says Mr Valentin.
Soaring real estate prices have certainly boosted the ranks of the homelessness - there are officially some 7,500 people living on the streets of San Francisco, a city of just 900,000 inhabitants.
While Hong Kong is the most overvalued housing market globally this year, San Francisco was the most overvalued in the United States, according to the 2018 Global Real Estate Bubble Index.
"Real prices in San Francisco climbed 9 per cent since last summer (2017) and now exceed their 2006 peak by more than 20 per cent, amid a thriving local economy, significant non-cash earnings by many tech employees, and buoyant foreign demand. The city is approaching high valuation risk," the report said.
The median price for all San Francisco Bay Area homes sold in August 2018 was $830,000, up 12.4 per cent annually, according to CoreLogic, while June and May saw the highest median prices ever.
But while high prices have hurt the lower earners, they have also driven out the middle classes, who now live in the far suburbs, with commutes of two or three hours each way. That aggravates road congestion.
As a result, "we almost always have openings for certain lower-paying jobs, such as medical assistants" who cannot afford to live in the city, says Peggy Sugar, 55, who works in the health sector and has lived here for more than 30 years.
The same goes for teachers, firefighters, social workers, waiters and delivery workers, among others.
Yet Mr McClelland says this is not entirely the tech sector's fault per se.
"Tech is a beneficiary of what is a very complicated environment ... and hasn't figured out how to turn this investment that it's benefited from back to the public," he says.
Tech giants are becoming aware of the criticism leveled at them - and have started to react.
January saw the launch of the "Partnership for the Bay's Future," bringing together public and private organisations, including Facebook, Genentech and several foundations, who pledged $500m to tackle the problems of housing and transport.
The head of Salesforce, Marc Benioff, recently came out in favour of plans to tax major businesses in San Francisco to help the homeless.
Twitter founder Jack Dorsey opposes the move. The pair engaged in a Twitter spat in October over who was doing the most to address homelessness,
While the tax could potentially redirect millions of dollars to help thousands of living on the streets, including outside the headquarters of both companies, Mr Dorsey said he was opposed because he believes one of companies he heads up as chief executive, Square, would be taxed at unfair rates compared to other major firms, including Salesforce.
Published: March 20, 2019 01:56 PM