SAN JOSE: Silicon Valley will remain a boomtown for the foreseeable future, helping to spur a strong economy throughout the Bay Area, but the region's surge will exacerbate housing and traffic woes locally, economic and political experts warned.
Those rosy and forbidding assessments emerged during a San Jose State University economic summit, whose headline speakers insisted that a housing boom is needed to help offset negative side effects of the remarkable economic and tech boom in the Bay Area.
Nevertheless, what also became clear during the annual summit at the university is that the increasing number of tech companies that have moved to San Jose, or are about to, has played a role in helping to place more jobs near where a huge amount of housing can be built or now exists.
“Lots of companies are expanding here,” San Jose Mayor Sam Liccardo said during a presentation to the summit. The mayor was referring to major expansions in, or relocations to, San Jose by tech firms such as HP Enterprise, 8X8, Apple and Bloom Energy, along with Google's wide-ranging plans for a transit-oriented community of offices, homes, retail, restaurants and open spaces in the city's downtown.
Mayor Liccardo added, “The centre of tech gravity is shifting southward to San Jose. We are back in the game.”
San Jose's improvement in the Bay Area's economic standings, though, has arrived with the unsettling reality that the region's transportation systems are packed with vehicles and transit riders, home prices are skyrocketing, and middle- and low-income workers increasingly feel burned by the blistering increase in the cost of living.
One big problem: California and the Bay Area's communities, with the possible exception of San Jose, have failed to build nearly enough housing to accommodate the employment wave that has bolstered regional and state-wide economies.
“The housing crisis is going to get worse and worse and worse and worse,” Christopher Thornberg, founding partner with Beacon Economics, said during a presentation to the university's event.
California needs construction of roughly 210,000 to 250,000 residential units a year but is building more like 110,000 annually, Thornberg estimated.
A further squeeze could emerge due to the steady increase in jobs.
Over the 12 months that ended in April, the total number of payroll jobs jumped by 3.6% in Santa Clara County. The South Bay's gains were far ahead of the 2.3% increase in East Bay job totals and the 1.7% rise in the San Francisco-San Mateo region over the similar one-year period, state labour officials reported recently.
“Job growth has translated into higher pay for South Bay workers,” according to a Beacon report prepared for the economic summit. “As unemployment edges down to record lows, this causes wages to go up due to demand for labour. Wages have grown across most of the industries in the South Bay.”
During the third quarter of 2017, the average annual wage in the South Bay reached US$124,000 (RM493,867), according to Beacon. That was an increase of 4.2% from the same period the year before.
The higher wages, though, have created a fresh complication for people seeking dwellings in the South Bay and other parts of the Bay Area. Tech workers and others in higher wage brackets may be better able financially to compete to buy or rent homes or apartments.
“The tech sector will continue to thrive here and grow, but that could push out traditional sectors,” Thornberg said. “Low-income jobs could start to get pushed out.”
That, in turn, could make the Bay Area – and the South Bay in particular – more dependent on the technology industry for its economic strength.
“If there is a tech downturn, it will hurt much worse in the Bay Area,” Thornberg said.
Mayor Liccardo vowed to push forward with his plan for development of 25,000 residential units in San Jose through the end of 2022. He said that 12,000 were either approved or being reviewed for potential approval, although only 3,000 were actually under construction.
“This is a start,” Liccardo said. “We have a lot of work to do.” — The San Jose Mercury News/Tribune News Service
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