|Downtown San Jose, CA. Source: cbre.us|
There are a lot of people who reflexively don’t buy the “Silicon Valley = Detroit” viewpoint. But I think we’re seeing the veil being lifted from the Valley. If the Silicon Valley communities don’t act, they may find themselves on the outside looking in.
There’s been a lot of attention paid to the “Google bus” controversy since Google and other Silicon Valley tech companies began running shuttles from San Francisco to Valley employers, some 40 miles south. Most of the attention has been given to the protesters, who’ve been complaining about the impact of the new arrivals in San Francisco. They, say the protesters, are raising property values and rents, and driving out middle class and working class residents. They are altering the character of the city they know and love.
I sympathize with the protesters. Really, I do. But this is the new face of similar battles that were fought 50-60 years ago in Rust Belt cities, between long-time residents in farming communities and the newly-minted middle class workers buying homes in brand new subdivisions. Cities are the new suburbs, and suburbs are the new inner city.
I say Silicon Valley communities must act, because fundamentally this appears (from my safe position 2,000 miles away) to fundamentally be a housing supply issue. Let’s look at some charts to see how.
Here’s a table that shows the thirteen Silicon Valley communities, with their 2010 U.S. Census population, their land area, estimated gross density (people per square mile) and estimated dwelling units per acre:
|Pop. (2010)||Area||Density (per sq. mi.)||D.U. per Ac (Est.)|
|Los Altos Hills||7,922||8.8||900.2||0.51|
So Silicon Valley has 1.6 million people within its 324 square miles. That makes the Valley similar in population to Philadelphia, but with twice the land area. The Valley’s been built out at a relatively decent suburban density of just under 5,000 people per square mile and 3 dwelling units per acre. That’s on par with suburban densities in many East Coast and Midwest areas, and similar to core city densities in much of the Sun Belt. And that’s with the understanding that there may be many areas that are undeveloped or unbuildable, which may never contribute to the gross figures.
According to Zillow, the median home price in San Francisco in November 2013 was $881,000, and the median rent value was $3,400. Hardly affordable. Interestingly, the same figures for Santa Clara County were $745,000 and $2,300, respectively.
It seems to me that the whole issue is really about the supply of rental housing in the Bay Area. According to the 2012 American Community Survey, Santa Clara County, home of most of the Silicon Valley communities, has about 636,000 housing units. Of those, 53 percent are single-family detached homes, and 47 percent are all other types (single-family attached and all multiple unit structures). In addition, 58 percent of all units are owner-occupied and 42 percent are renter-occupied. In San Francisco, things are a little different. With 377,000 total housing units, only 19 percent are single-family detached homes, and 81 percent are all other types. Moreover, 63 percent are renter-occupied and on 37 percent are owner-occupied.
It appears to me that Silicon Valley workers are making a pragmatic decision to find available rental housing where it exists in an extremely high priced market. It also appears Google and others are seeking to find a solution to this problem. But ultimately, it looks like the loser in this battle might be the Silicon Valley communities.
But this comes at a cost to the Valley communities. Because housing is expensive, because there is a relative lack of rental housing (especially compared to San Francisco) and because the Valley communities lack the dynamism that so many young tech workers seem to be craving, they are on the losing side of this fight.
There appears to be room to add housing units in a way that could meet demand. Using an estimate of 2.75 persons per unit, I estimate the Valley has just under 584,000 housing units. What if, for example, all the Valley communities built out at a density similar to San Jose, the largest Valley city? Here’s what you’d get:
|Silicon Valley, at San Jose Densities|
|D.U.s per Ac||3.05|
|Silicon Valley, at Campbell Densities|
|D.U.s per Ac||3.85|
Density is an outcome, not a goal. A goal worth pursuing, yes, but it should be a marker of your city’s success, not an element of its strategy. Density does not produce serendipity; serendipity produces density.
It looks to me that the innovation that created the Valley’s tech economy, and the serendipity that grew along with it, is pushing the communities to address the issue of density. One wonders if they hear the call.