Business & Economy

Fits and Starts: Tech boom fuels Bay Area recovery — and housing prices

Construction work on the Salesforce Tower in San Francisco’s booming “SoMa” neighborhood, with one of the city’s landmark existing residential buildings, the Millennium Tower, in the background.
Construction work on the Salesforce Tower in San Francisco’s booming “SoMa” neighborhood, with one of the city’s landmark existing residential buildings, the Millennium Tower, in the background.
Ben Adler/ Capital Public Radio
Construction work on the Salesforce Tower in San Francisco’s booming “SoMa” neighborhood, with one of the city’s landmark existing residential buildings, the Millennium Tower, in the background.
Damon Grow, on the patio of the Millennium Tower in San Francisco’s booming “SoMa” neighborhood. He moved into the Millennium four years ago after selling his stake in a successful start-up tech company.
Ben Adler/ Capital Public Radio
Construction work on the Salesforce Tower in San Francisco’s booming “SoMa” neighborhood, with one of the city’s landmark existing residential buildings, the Millennium Tower, in the background.
Joann Avila (left) and Lorraine Nessel, with their dog Bijou, in the West Oakland home they’ve rented for the last six years. They’re moving out in December because their landlord is moving back in.
Ben Adler/ Capital Public Radio
Construction work on the Salesforce Tower in San Francisco’s booming “SoMa” neighborhood, with one of the city’s landmark existing residential buildings, the Millennium Tower, in the background.
Despite West Oakland’s historic struggles, new mixed-use projects are beginning to change the look of the neighborhood.
Ben Adler/ Capital Public Radio


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Five years after the recession sent the Bay Area's economy reeling, entrepreneurs like Damon Grow are back in clover after some pretty lean times.

"Things were good," Grow said. "And then, all of a sudden — I mean, literally it was one day — the mortgage crisis was all over the news. And, oh, my God, I mean, raising money during that time was just nearly impossible."

But now, things have improved. Grow raised a half-million dollars from a Dutch billionaire. His startup blossomed, and as the Bay Area began its economic rebound, Damon cashed out.

The story is much the same around the region. The latest unemployment rates in each of the nine Bay Area counties are far below the statewide average. 

"We're almost doing triple the national average in terms of recent job growth," said Stephen Levy, an economist with the Center for Continuing Study of the California economy. "And it's almost all driven by tech, and then the income that comes from tech, and people go out and spend it on restaurants and cars and other things."

But the region risks becoming a victim of its own success. The tech boom has sent housing values soaring. The median Bay Area home price is now well over $600,000, more than twice what it was in the depths of the recession. 

That's fine if you already own a home, Levy said. But if you don't, "there's a dramatic undersupply at the time when job growth is just surging. So that puts just rampant upward pressure on prices and rents."

From ramen to the Millennium 

Damon Grow is your classic San Francisco techie —  smart, aggressive — and he talks as fast as he thinks. He's an all-or-nothing guy.

He came to the city nearly 20 years ago at age 19 and  got involved in a few startups. He did OK. Then the recession struck, and the venture capital dried up. He ate ramen or ordered off the McDonald's Dollar Menu.

"I'd go in there, and you get a chicken sandwich for a dollar, and then another dollar you get two pies. And that was, like, my day. It was awesome," he said.

Today, Grow lives in San Francisco's signature residential high-rise — the 58-story Millennium Tower — in the city's booming SoMa neighborhood. The Millennium's average unit sells for nearly $2 million.

It's hard to hear the construction over the sounds of city life, but new buildings are popping up everywhere — and not just any buildings, but skyscrapers, like the 61-story Salesforce Tower under construction across the street from Grow. It's named after the tech giant that's signed on to rent half of it.

"These companies are just exploding," Grow said. "Residentials are being built. They're extremely expensive, but the system supports itself, right? Because if it wouldn't, it would collapse."

Squeezed out

Lorraine Nessel and Joann Avila have rented a two-bedroom home in West Oakland for six years, and are being squeezed by the housing market. Both earn a solid living: Avila's a union painter, and Nessel is a ride-share driver and also runs a dog-walking and pet-sitting business.

They love their home, no matter the gunshots they heard again a few nights ago or the car cover just stolen from Avila's '54 Chevy. She says they've worked to make their neighborhood better.

"I would go outside and sweep the sidewalks, sweep the gutters, and I'd say, 'Hey, neighbor, you know, the street sweeper can't make it past your tree over there,'" Avila said. "Do you mind trimming it?"

Now, like much of the East Bay, West Oakland property values are jumping. A house across the street just sold for nearly $425,000. And, last month, their landlord said he's moving back in — so they must move out.

Nessel said she broke down in tears. "This is where I started my business," she said. "This is the first house that I've ever lived in. I've always had an apartment. This is the first place that has ever felt like a home to me."

Despite their two solid, middle-class incomes, the best they can afford is a two-bedroom apartment in Richmond, a struggling city north of Berkeley. "We're paying $150 more for a much smaller space and a much longer commute," Nessel said.

That's the Bay Area's economic quandary: Explosive growth in both the job market and the housing market. Some cities are building more places to live. The question is whether that additional supply will slow the housing boom down — at least a little bit.

This story is part of Fits and Starts: Stories of Recovery in California Cities, a partnership between KPCC and Capital Public Radio. You can read other parts of the series here. Please let us know what you think in the comments below, on our Facebook page or on Twitter (@KPCC).