Sustainable Solutions to Silicon Valley’s Housing Bubble
Silicon Valley is one of the most expensive places on earth to live. In its epicenter, Palo Alto, the median price for a single-family home is $2.6 million. Yes, we said the median. That means half of single-family homes cost more. Meanwhile, in the United States as a whole, the median price of a single-family home is just $240,000.
The housing bubble in Silicon Valley extends throughout the San Francisco Bay area to the north. Currently, San Francisco is the most expensive city in the United States to live in, with the median cost of a one-bedroom rental at $3,590.
At one point, people employed in Silicon Valley’s technology companies — the fabled Apple, Google and Facebook, as well as many smaller tech companies and vigorous startups — made enough to keep up with the housing costs. After all, even a beginning engineer could start at $100,000 per year. But recently, the housing bubble has become so overheated even experienced engineers must bunk with roommates to afford a place to live in Silicon Valley.
The Scope of the Problem
But what about folks in most modestly paid professions?
Teachers, for example, even in Silicon Valley, start their earning years at about $45,000 in salary. If they make as much as $100,000, it’s likely after several decades of teaching.
And unlike tech salaries, the market has no bearing on teacher salaries. Teachers’ pay comes from citizens’ property and other taxes, and public-school teachers’ salaries are based on factors such as seniority and certifications. As a result, they cannot negotiate for significantly more money.
As a result, the unaffordability of housing in the area is the key reason Silicon Valley’s top-rated public schools lose teachers.
All public employees, including police, firefighters, sanitation workers and more, are in the same boat. Their salaries are often far too modest to afford homes in the districts in which they work. They either end up having extensive commutes or moving.
At the same time, the services they provide are essential. And, of course, public employees are not the only people whose salaries are modest, but who provide services nearly everyone uses. What about other modestly paid groups, such as auto mechanics, waiters and gardeners? Bookstore clerks? Child care workers?
Where are people who don’t start at $100,000 to live? For that matter, where are the $100,000 earners to live as even premium-priced homes become unavailable? When they do, the owners of more reasonably priced homes tend to hold on to them.
There is an enormous need for affordable housing in Silicon Valley.
Potential Solutions
The fact is, potential solutions to affordable housing exist. They need governmental will and innovative solutions to come to fruition.
Although Silicon Valley is a textbook case of unaffordable housing, it is not the only area of the country where skyrocketing housing prices have caused a crunch for modestly paid workers. Here is an overview of some solutions.
- Build on a Landfill
This solution is happening in the heart of Silicon Valley. It’s a controversial proposal, but builders did receive approval for a plan to put housing units on top of a landfill. The project will put layers of building material between the housing and the landfill, to alleviate the escape of toxic material and other concerns.
The drawback? This move is controversial, and it may not prove a popular housing site.
- Build on Vacant Space
One theory holds lack of housing stock leads to lack of affordability. This concept is counterbalanced by the view that red-hot markets like Silicon Valley are likely to bid up prices of newly built housing as well. Also, many areas want to keep vacant space vacant, for green space and to retain attractive low-density housing.
Some areas have built on vacant property that has been an eyesore or associated with crime. Cities have invested tax monies to make the area attractive and safe. Careful planning can turn these areas into showcases for green, affordable living that serve as models for how such neighborhoods should be developed.
- Set Aside Affordable Housing Units
A popular proposal in many areas of the country is to set aside affordable housing units in every new development. When a building receives approval, the builders must agree to set aside a certain percentage for affordable housing, say 15 percent.
Cities earmark the housing in these properties for public employees such as teachers, police and so on.
- Rehab Old Buildings That Have Fallen Into Disuse
Buildings sometimes fall into disuse because times have changed. In Denver, for example, a former nurses’ dormitory has been rehabbed for affordable housing. Old hospitals and sanitariums near a city center may be vacant because that is no longer a popular place to build these sites.
Unused buildings are ideal for rehabbing sustainably, as cities can transform them into housing within walking distance of downtown jobs, shops and restaurants.
- Allow Higher-Density Housing
Many cities and towns with a sustainably priced housing crunch are thick with low-density buildings, such as single-family homes. Higher-density housing, such as high-rise apartments with rooftop gardens, would house more people in an eco-friendly environment.
Silicon Valley is experiencing a housing bubble, making it difficult to live there. However, multiple sustainable solutions exist and can succeed with enough innovative thinking and public support.