Bay Area Housing Crisis
The root cause of the lack of affordable housing in the bay area is a basic law of supply and demand in economics, people want to live here, and there aren’t enough homes to go around. The abundance of sunshine, relatively easy access to bustling cities, endless coastline, and exposure to a variety of cultures makes the Bay Area incredibly alluring. This combined with the draw of the highly prestigious and opportunity rich Silicon Valley causes housing in the Bay Area to be in high demand. Thirtysix of the Fortune 500 companies are headquartered in the Bay Area, which is greater than any other metropolitan area except New York City. In 2017, the combined revenue generated by these companies was $1.3 Trillion Dollars. “As of September 2017, of the 216 start-ups worldwide with a $1billion valuation, 56 were from the Bay Area, versus 52 from the balance of the rest of the US”.
The lack of supply of housing the Bay Area contributes greatly to the crisis and is caused by interesting things. It’s a really easy decision for commercial real estate developers to build office space instead of housing in the bay area because they make significantly more money. To build office space, the costs are less because you don’t have to finish the inside of buildings with as much plumbing or high end fixtures as residential housing. Also, most of the space inside commercial buildings are left open for cubicles so there isn’t even the expense for walls. Over the last several years, Silicon Valley corporations are rich in earnings in expanding markets, and are growing and buying more office space at a record pace. Right now, the supply for office space is high and people keep buying. Unfortunately for houses the demand may be there, but the supply isn't.
newmarkrealtycapital.com/wp-content/uploads/2016/01/BA-Economic-Engine-2017.pdf
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