Housing Prices May Scare Talent Away
May 17 - KGO (KGO) -- Homeowners in the Bay Area love to boast about the value of their houses. But would-be buyers who can't scrape up the down-payment are creating a new headache for employers -- a Bay Area brain drain. The lack of affordable housing may hurt our economy.
The Bay Area's high home prices are becoming a concern, and not just for buyers. The median priced house is over $729,000. That's almost four times the national average.
The growing fear is that the Bay Area may suffer a brain drain as the brightest and best leave for other cities where home prices are affordable.
Sean Randolph, JD PhD, Bay Area economic forum: "I think we need to be very concerned about our ability here to continue to attract and retain the most talented people in the world in the future."
Rob Geronimo is evidence that the Bay Area brain drain is underway. He, his wife Pia, and two daughters moved to Elk Grove, just south of Sacramento, to find an affordable house. They bought a six bedroom house for $700,000 that would cost at least $300,000 more in the Bay Area.
The Geronimo's made a choice that serves as a wake-up call for Bay Area business and civic leaders.
Rob Geronimo, Sacramento area resident: "Something's got to give. Things tend to creep up and up, and if the housing market keeps escalating the way it does, it's going to drive the good workers - the valued workers - away from the area and look elsewhere."
Geronimo was expecting to quit his Silicon Valley job in corporate finance at Citrix. A comparable job in Sacramento pays 25- to 30-percent less. But his employer allows him to work at home two or three days a week.
Bay Area workers spend an average of 48-percent of their yearly income on housing. By contrast, workers in Boston pay 37-percent; Seattle, 33-percent; Austin, Texas, 26-percent; and Charlotte, 24-percent.
Sean Randolph, JD PhD, Bay Area economic forum: "Unless public officials directly tackle the issue of housing supply, unless we can find other ways to get our cost of living under control, so it's not escalating faster than it is elsewhere in the country, then we're going to have some problems."
The Bay Area has been a magnet for engineers and other technical workers, anxious for a chance to innovate. Live Ops in Palo Alto says finding talent hasn't been a problem, despite housing costs. Live Ops is a start-up that creates virtual call centers by linking workers anywhere.
Jim Everingham, Live Ops chief technical officer: "I think that the brightest and the best are the brightest and the best because they're motivated. They're pursuing their passion, and their passion is to build great technology. It's not the price of their house."
However, Anno Saxenian at UC Berkeley worries that high home prices will lead to an erosion of the Bay Area's competitiveness.
Anno Saxenian, PhD, dean, UC Berkeley School of Information: "It's true you can continue to get young people who want to be where the action is in the Bay Area, but eventually they become middle-aged people and they want bigger homes. They want to have children, they have children who need to go to school, and often they can't afford to buy the homes that, 20-to-30-years-ago, a middle-income salary would buy."
It all boils down to priorities. The Bay Area has high-paying jobs and opportunities for great careers.
Anno Saxenian, PhD, dean, UC Berkeley School of Information: "We are smug, and we're wrong to be smug."
People also need a place to live -- and there are less expensive choices.
Sean Randolph, JD PhD, Bay Area economic forum: "It's harder and harder to get people to move here from elsewhere in the country, but we need those people. We need their talent."
Experts say a Bay Area brain drain threatens to take hold unless the supply of housing keeps pace with the growth in jobs. Right now, the Bay Area produces about 5,000 fewer houses than it needs. That's good for housing appreciation, but it has negative impact on the Bay Area talent pool.
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