When Donna Arthur-Rosa and her husband Chris found out they were expecting their first child, the couple knew it was time to give up their one-bedroom apartment in San Francisco’s Noe Valley neighborhood. They didn't expect that their search for a bigger living space would end nearly 30 miles from the city they called home for over 18 years.
“It’s hard because I don’t think of ourselves as poor,” said Arthur-Rosa, who works as a product manager for a footwear company in the East Bay. “San Francisco to us is our home, which makes it really sad because we can’t afford it. It’s the place we identify with.”
For Arthur-Rosa and her husband, a two-bedroom apartment in the city would have cost three times what they were paying for their $1,100-per-month rent-controlled apartment, she said. It was more affordable to have a mortgage outside of the city than to rent in San Francisco. So after a year-and-a-half of house hunting, the couple and their now-20-month-old daughter settled in Novato, a city in Marin County.
Thanks to Silicon Valley’s job boom, the population in the Bay Area has skyrocketed and the influx of residents have economists and real estate experts worried about what it means for the region's housing supply and transportation infrastructure. The Bay Area has the state’s fastest growing population, according to a report released last month by the Department of Finance.
Santa Clara County, the heart of Silicon Valley, grew at a 1.5 percent rate in 2013, the highest spike in California. Workers are flocking to the region because it boasts one of the country’s lowest unemployment rates and most satisfied workers, but now there is a shortage of homes to buy and those that are available have become prohibitively expensive. The Bay Area tops the list of the least affordable homes in the state, according to the California Association of Realtors.
The population for each of the Bay Area’s nine counties has grown steadily each year since 2000. A few counties experienced a decline in the mid-2000s in the wake of the dotcom bust, but the overall population is on the rise, according to Bill Schooling, the Department of Finance’s chief of demographic research. And there’s no secret as to what’s contributing to the boom.
“Job growth has been an important part of it,” Schooling said. “A lot of people overseas and domestically want to live in the Bay Area.”
But the housing supply hasn't kept pace with the surging economy and rising population. San Francisco took on 10,617 new residents in 2013, but added only 2,277 new housing units. Santa Clara added 5,245 new units for over 27,600 newcomers. And Alameda added 2,474 new units for 23,135 new arrivals, according to the Department of Finance’s report. These supply gaps repeat itself throughout most of the nine counties.
There are simply not enough homes to go around, and the Rosas experienced this first hand. Novato was not their first choice, Arthur-Rosa said. They wanted to live somewhere with all the trappings of an urban lifestyle: restaurants, culture, close proximity to friends. This means Oakland and Berkeley are more their speed.
“Finding a place to purchase was another bear unto itself.” Arthur-Rosa said. “We were putting in multiple bids and getting priced out by cash offers.”
Reports of bidding wars have emerged throughout the area. Some homes have attracted nearly 30 offers, with buyers paying hundreds of thousands of dollars over the asking price, according to the Mercury-News.
Arthur-Rosa, 37, grew up in Petaluma, about an hour outside of San Francisco. She said she’s watched the Bay Area and the city change in a way that has alienated locals and those she calls “creative types.” Everywhere she looked, she saw single family homes converted into condos.
“There used to be a lot of affordable dining and now there is just a lot of shi-shi restaurants,” she said. “It’s just crowded all the time and you can’t get anywhere.”
There doesn't seem to be any relief in sight. Earlier this year, the Mercury News reported that the Bay Area’s astronomical home prices are having a spillover effect to neighboring San Joaquin, Stanislaus and San Benito counties. Home prices in these counties are now rising as a result, but are still substantially more affordable than living in San Francisco, Oakland or San Jose, the report said.
The median price paid for a home in the nine-county Bay Area went up in April to a new post-recession high of $610,000, according to a report by DataQuick, a San Diego-based real estate information service. That’s 5.4 percent higher than it was in March, and 20 percent higher than it was in April of last year. San Jose and San Francisco, the Bay Area’s two metropolitan areas, have the highest median home prices in the nation, according to online real estate database Zillow.com.
“We haven’t been planning well for population growth,” said Jim Wunderman, CEO of the Bay Area Council, a network of the Bay Area’s 275 biggest employers including Facebook, Apple and Google. “It’s going to push housing prices up, which has the effect of eliminating the middle class and working families from the neighborhood they grew up in.”
San Francisco native Edgar Japitana is also feeling pushed out of the city he calls home.
“I want to buy, but it’s too expensive,” said Japitana. “If I do buy, I’d probably have to go somewhere in the East Bay or the Peninsula.”
Until then, the 29-year-old engineer said he is confined to a $2,500-a-month two-bedroom apartment in the city’s Richmond District, which he shares with a roommate. He said he “got lucky” because the apartment is rent controlled. He thinks the market rate for the apartment is at least $500 higher.
The population boom is prompting policymakers to think about how future housing development occurs. Experts say new homes should be built along transit lines to encourage the use of public transportation and give the overburdened roads a break.
There has been a 2 percent increase in vehicle traffic across all seven state-owned toll bridges in the area. This is the third straight year of growth and the increase seems to be accelerating, according to John Goodwin, a spokesperson at the Metropolitan Transportation Commission. BART and Muni are also setting passenger records, he said. Caltrain’s preliminary numbers for 2014 show an 11.8 percent increase in ridership.
“The biggest challenge for policymakers right now is ensuring that people can afford to live in the Bay Area and move around,” said Ratna Amin, Transportation Policy Director at SPUR, a Bay Area think tank.
Amin points to a long-term plan that officials adopted last summer to drive housing development towards urban areas near mass transit systems to stymie suburban sprawl. The MTC and the Association of Bay Area Governments approved Plan Bay Area to put most of the 2 million additional people expected to move to the region in the next three decades near public transportation.
“We need to focus on building more compact communities where people can walk, bike, or take transit systems for more of their trips instead of building more highways,” Amin said.
Real estate experts agree.
“It has to happen,” said Paul Desmet, President of The Ryness Company, a Bay Area-based sales and marketing company for new home developers. “You can’t keep people on freeways in bumper-to-bumper traffic for two hours every day.”
The plan aims to direct 77 percent of future growth to areas like downtown San Rafael, Walnut Creek, Fairfield, and Suisun City's waterfront -- where homes are walking distance from shopping, dining, recreation and public transportation -- with grant money for affordable and high-density housing. Homes prices are currently 10 to 20 percent higher near the Walnut Creek BART station, Desmet said.
"It’s a tight market and they can’t build a lot,” said Andrew LePage, an analyst at DataQuick. “There’s not a lot of vacant land left, so developers have to start going vertical.”
But the plan is not perfect. Most of the transportation money in Plan Bay Area is earmarked for maintenance alone and there is still a $20 billion shortfall needed to keep the region’s transit systems in good repair for the next 30 years. Ensuring that BART, Caltrain, Muni and other systems can accommodate more riders will require even more funding.
Most Bay Area residents agree that the region's housing and transportation problems need to be dealt with immediately. A recent poll by the Bay Area Council shows that of the 1,000 people interviewed, over 75 percent say that the region is in the grip of a housing cost crisis, while 71 percent say that traffic congestion has reached a crisis stage.
Japitana is part of that majority and is no stranger to a Bay Area commute besieged by gridlock. He said he sits in traffic for nearly two-hours each day to travel the 40 miles from his apartment to Palo Alto where his company is based. Japitana says he drives, but on some days he prefers public transportation.
“I can save some money on gas, but more importantly it saves time and I don’t have to deal with traffic and the hassle of commuting,” Japitana said.
Japitana said his employer reimburses him for 50 percent of his public transportation costs, which comes out to about $260 a month for bus and BART fare.
The practice of ferrying employees to work is not new. Silicon Valley’s tech giants Facebook, Google and Apple have been using San Francisco’s bus and railway stops as pickup locations for shuttle services that takes their employees to work, sometimes as far as 50 miles away.
But last month, activists took the city to task with a lawsuit because Muni approved an 18-month pilot program in January to charge tech companies $1 per stop starting in July. The plaintiffs claim that it is illegal for private vehicles to use public bus stops.
“I think it’s crazy to sue the tech companies,” Wunderman said. “These buses are keeping people off the road who would otherwise be driving cars.”
Interactive Map: Bay Area's Nine-County Population Growth by Percentage
(Roll over county to see percentage)