The same story is playing out, over and over: People are flocking to the Bay Area for high-skilled, highly paid jobs, while cashiers, teachers and construction workers are, increasingly, saying goodbye to a place they no longer can afford.
A new study released Thursday points to why the California housing crisis is so acute, particularly in the Bay Area — where a home destroyed by fire sold for more than $900,000 and it would take four minimum wage jobs to afford an apartment: More people are moving in from other states than moving out. No other region in California has experienced such explosive growth of high-paying jobs. Statewide, between 2011 and 2016, California added just 171 homes for every 1,000 people.
“The boom is so ferocious that it exaggerates the driving up of the rents and the cost of living,” said Richard Walker, a geography professor emeritus at UC Berkeley and author of a new book, “Pictures of a Gone City: Tech and the Dark Side of Prosperity in the San Francisco Bay Area.”
The new research by Beacon Economics weaves together housing, economic and migration data, highlighting the underproduction of homes and cost pressures facing low- and middle-income workers amid the housing crisis. It examines the dilemma of the nation’s biggest economic engine, which is providing so much opportunity for some, while shutting so many out.
The study, commissioned by the San Francisco public policy group Next 10, documented a growing economic divide. While pay for California’s low-wage earners grew by just 17 percent over the past decade, wages rose by 29 percent for middle-income workers and nearly 43 percent for high-wage earners.
The key question for California is, “How do you manage the effects of success?” said Michael Storper, an economic geographer at UCLA’s Luskin School of Public Affairs. “At the moment we are a winner economy. California is amazing in how much it attracts high-wage, high-skill industries. Who wouldn’t want to be like that?”
At the same time, he said, how do you preserve housing for the majority of residents who don’t command high salaries? Or find a way to pay them more?
Carmelita Reyes, principal of Oakland’s International High School, said that when she started teaching in the city in 2001, many of the young teachers rented apartments by Lake Merritt.
“No one was getting rich being a teacher, but you could afford to live in Oakland,” she said. The narrative back then, she said, was “teachers are never going to buy a house. And now it’s `teachers can’t afford an apartment.’ ”
One of her teachers commutes from Napa County, where she found a cheap place to rent. A fellow Oakland principal has decided to open her home to travelers, renting out a bedroom on Airbnb.
Fed up with housing costs, some Californians are leaving the state altogether. The study found that between 2006 and 2016, more than 1 million more people left California for other states than moved in from the rest of the U.S.
“These high home prices and high rents are forcing more low and middle-income Californians to leave the state for more affordable housing in states like Texas and Washington and Arizona,” said Noel Perry, Next 10’s Founder.
Researchers found similar patterns for international migration: Higher-skilled migrants from other countries are replacing lower-skilled migrants in California.
And though the Bay Area has grown in recent years, that pattern may be shifting. The new study, along with a recent report from the Joint Venture Silicon Valley think tank, found that nearly as many people are leaving Silicon Valley as are coming in. The think tank found the biggest drops were for residents between the ages of 18 and 24, and between 45 and 64.
The Bay Area always has been a high-wage economy, Walker notes, but the latest boom has attracted such an enormous level of investment in tech and other lucrative sectors that “the whole thing has gotten out of hand.”
“You can’t keep that economy going — you can’t feed people, you can’t get them the things they want, you can’t deal with the tourists, you can’t drive buses — without lower and middle-income workers to do those kinds of jobs,” he said.
The Next 10 report did not include recommendations. Perry, its founder, said the study was intended to help state and local policymakers try to solve some of these challenges.
“In order to support long-term, sustainable economic growth in California, our state needs to support a diverse economy — that means jobs and housing for people at all income levels,” he said.
The insatiable demand for housing that has uprooted so many Californians is forcing an 80-year-old Pleasanton resident to leave the house he has rented for 46 years, his daughter said. Tricia Davis said her father and stepmother got a letter in April saying that they could stay in the home — if they agreed to a $1,000 rent hike. They considered moving to Montana, where Davis lives, and then to Fresno, near another relative, before discovering an apartment for people over 62, in town, that they could afford.
“For them to have to try to just move, it’s been pretty traumatic,” Davis said.
Davis, an agent for Delta Air Lines, said she long ago gave up on living in the East Bay city where she grew up. “Pleasanton, as great of a town as it is, even with a college degree I couldn’t afford to live there.”