A citywide crisis in gentrification? New SF residents make far more money than those leaving
San Francisco's newest residents are richer, younger and more educated than those leaving the city, a new study finds.
The former Gold Rush boomtown was once a place people went to make their fortunes, but a new BuildZoom study reveals most of San Francisco's newcomers arrive with ample cash in their pockets, at least by national standards.
According to Issi Romem, the author of the study and chief BuildZoom economist, people who moved to San Francisco between 2005 and 2016 made $12,640 more annually than those who left the city in the same time period. This figure accelerated from 2010 to 2016, when newcomers made about $18,700 more than former residents.
In-migrants arrive not only with higher salaries, but also higher levels of education. Around 60 percent of newly arrived folks possess at least a four-year college degree, compared to 50 percent of outgoing residents.
Even highly educated young folks pulling six-figure salaries have trouble staying in San Francisco. Romem is quick to distinguish between "income" and "wealth" – many newcomers possess the former, but lack the latter. That creates problems for residential longevity.
When home values increase faster than incomes, buying a house becomes more heavily dependent on one's wealth than income. If housing prices continue to grow at a rate disproportionate to incomes, "this could cause homeownership to become more dependent on cross-generational assistance," Romem writes.
"This state of affairs would sharpen the distinction between owners and renters, aligning them more closely with socio-economic class than with people's stage in the life cycle."
High real estate costs have a deterrent effect on lower-paid workers – when people know they can't afford a place, they stay away, further increasing the socioeconomic rift between in-migrants and out-migrants.
A new class of San Franciscans has grown out of the expensive coastal city and the difficulties it poses to those hoping to settle down, Romem says. He refers to this group as the "transient class." They move to a coastal metro for career opportunities when young and, typically, single, then leave when the region proves incompatible with raising a family.
"When young, people tend to make do with less in order to 'survive' the housing crisis," Romem told SFGATE. Survival in Silicon Valley often means living with multiple roommates and making do with less space, he said.
Substandard living conditions may suffice when you're young and hungry, but then "people hit that point in life" when they want to "set roots down," Romem said.
When kids enter the mix – and bring with them the high cost of childcare and an increased need for space – people must seriously consider whether to stay in the costly Bay Area, or go. Many choose the latter, and move to other metros with ample career opportunity but lower housing costs, like Austin, Texas, Dallas or Atlanta. A recent study even found the so-called "Bay Area exodus" has led to a regional U-Haul shortage.
These cities, and others like them in the southern part of the United States, have what the Bay Area lacks: affordable housing.
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Still, such a move, especially for someone who has lived in the Bay Area longterm, comes with a "real human cost," Romem says. Out-migrants may have to leave their extended families, uproot young children from schools and friends, and in some cases, careers may suffer.
"Is it as bad as being homeless? As people starving in parts of the world? No," Romem says. "It's a first-world problem. But it affects people's lives in a real way."
Hailey Brook Marshall, a 26-year-old graphic designer, left San Francisco for Portland two years ago. She got married and wanted to "settle down."
"If I were by myself I would for sure move back to San Francisco," she said. "But, yo, lifestyle change!"
Marshall said she misses the "vibes" of the city more than anything. The first time she returned to San Francisco after her move, she recalled touching down at SFO and thinking, "Oh my god, I left my heart here."
While metros like Portland have their charms and benefits, Silicon Valley is still, in the end, Silicon Valley. Firms, labor and capital go where the like-minded go. In the tech industry, that's the Bay Area.
People have been predicting the "death of Silicon Valley" for decades, but Romem predicts it could be upwards of five to 10 decades before the region is dethroned as the capital of technology.
Its decline, Romem says, could be slowed.
"If the Bay Area wants to remain Silicon Valley for many, many years," he said, "a safer strategy would be to build enough housing to contain the people that want to live there."