In San Francisco today being middle class is something very different from what it is in other parts of the world. In this city and this area, the area of the Bay, to be middle class a couple must earn more than 200,000 dollars per year, about 178,000 euros. But that is not the reality of most of the residents here (not even far) and it shows especially in the tremendous housing bubble in all Silicon Valley
The announcement that several technological unicorns will go public in the coming months has generated a certain social alarm among that elusive middle class but above all, among the mass of residents whose payrolls do not reach even six figures per year. In about a year, Lyft (which went public at the end of March), Uber, Pinterest, AirBnB and Slack will be listed companies.
"It is feared that now there will be a rain of instant rich and that's going to cause housing prices to go up abruptly, "explains Todd David of the Housing Action Coalition in San Francisco (SFHAC). "Prices will rise in general, but not only because of these IPOs, but because prices are so high that in reality, the influence of these companies on the price of housing will be marginal."
According to Todd, in a couple of years a single-family home in San Francisco, which now costs 1.5 million dollars, will go up 15% or 20%. "That alone is more scary than the supposed flood of new millionaires and the root of the problem is the limited space we have in this city to build."
The technological boom of the past 30 years, coupled with Americans' preference to build single-family homes, has meant that the lack of housing pushes many neighbors out of a lifetime. And not only from San Francisco, but sometimes from the whole area, since the high prices both for sale and rent, create waves of expansion that cover all the nearby locations.
Lack of solutions
"I'd like to be positive and say that the bubble is going to get better, but it's not going to happen, it's just going to get worse because more and more people are coming to work in this area," says Todd. "This is in my opinion due to the ineffectiveness of the politicians, who have not been able to give solutions to what was seen coming and now make these technology companies, scapegoats. "
One of the city councilors, Gordon Mar, demanded an investigation to determine the impact for residents who may have so many IPOs, in such a short time. "We have seen how the technology industry grew […] but we have also seen how the problems grew not only around the disparity of wealth and gentrification but also in access to housing, the increase in traffic in the city and in the region, "said Mar to the local media. one week.
In general, experts are much more cautious than politicians and the media in ensuring that this wave of IPOs has catastrophic repercussions. "It's not going to be the tsunami they're predicting," Ken Rosen of the Ken Rosen Advisory Group, an expert in real estate services in San Francisco, said by telephone. "The first thing is that you have to take into account that they will take six months to complete the whole process and the second, that the initial price of these actions will go down a lot, so they will not all be millionaires or billionaires."
In addition Ken Rosen, who is professor emeritus at the University of California at Berkeley, believes that most of the estimates regarding the rise in house prices are greatly exaggerated. "The impact of these IPOs is going to be marginal, but the important thing is that this real estate bubble that we are living through is going to click in a few years. The economy will adjust and we will see a gradual decline as growth stagnates in the Bay Area. "
For Ken Rosen, this area has already reached its peak of growth and is so expensive that many companies established here will start packing in search of greener and, above all, cheaper meadows.
"Not only many of the established ones, many others who would like to come to Silicon Valley, will think twice about the prices. In fact, it's already happening, now there are many other cities around Califonia that are attracting a lot of technological talent, like Las Vegas and Portland, "says Rosen. "Silicon Valley will always be Silicon Valley but it is that establishing in this area is almost impossible for many companies."