Tech Hubs Blamed for Skyrocketing Cost of Living

The Tenderloin district of San Francisco is a tough neighborhood – seedy nightlife and shabby discount stores abound. But dig a little deeper and you’ll find a vital immigrant community and, consequently, some of the best food in town.

For better or worse, the gritty streets of the Tenderloin and it’s even grittier characters have managed to resist San Francisco’s gentrification trend.

But things are changing.

Just a stone’s throw away from the dive bars and soup kitchens, a pristine blue and white sign adorns a huge brick building. Outside, throngs of hipsters wearing dark-rimmed glasses and designer jeans stroll past.

This is Twitter’s new headquarters on Market Street, and thanks to a hefty $22 million tax break, it’s a prime location for Twitter and other high-tech companies.

While a proportion of that tax break is being filtered back into the local community through outreach, education and youth programs, and infrastructure upgrades, there’s concern that tech giants like Twitter—attracting high-income employees who demand luxury apartment buildings and trendy cafes—will raise the cost of living so much that locals will be priced out of their neighborhoods.

The Tenderloin is an extreme example of what’s happening throughout San Francisco and other tech hubs all over the United States. Sure, high-cost cities like San Francisco tend to have higher median incomes, but the balance is out of whack.

According to recent studies by Trulia, if you’re middle class and want to live in San Francisco, you’ll be able to afford just 14 percent of the housing currently on the market there.

In San Francisco, a household making $78,840 annually can top out buying a home worth about $409,000. This will get you close to 1,000 square feet in a location you probably don’t want to live. Eighty-six percent of the housing in San Francisco is priced above that $409,000 threshold.

Rent in tech hubs like California’s San Jose and San Diego; Seattle, Wash.; and Middlesex County in Massachusetts is also on the rise. Even newer hubs like Austin, Texas are not immune.

Landlords ask one-third more in rent for a typical two-bedroom unit in a tech hub compared with other big metro areas, according to Trulia. And while rents have risen 3.3 percent year over year in the nation’s 100 biggest metropolitan areas, they’ve risen 5.7 percent in the 10 biggest tech hubs.

San Diego rents have risen 10.3 percent to an average $1,850 for a two-bedroom home. Austin saw a 10.1 percent increase, and in Seattle there was a 9.2 percent gain.

San Francisco topped the list with a 12.3 percent rise in rent to $3,350 for a two-bedroom apartment.

While the influx of high-income techies is partly to blame for the rising cost of housing, Trulia says that a lack of new-housing construction in many tech centers is also bumping up costs.

We should consider too that tech hubs are often located in areas that commanded top dollar even before the current technology boom.

Nevertheless, it’s worrying that tech hubs—oft touted as our nation’s future—are becoming less and less affordable, not only to middle-class families, but also to bright young graduates who, more than likely, are already carrying significant college debt.

Image: David Paul Morris/Bloomberg via Getty Images

This entry was posted in People, Profiles and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s