Real Estate in Oceanside CA
Debby Bright


Rapid Growth Causes Problems in Silicon Valley

Silicon Valley is booming, but its fast-paced and enormous growth has brought problems. At Thursday’s Cupertino/Sunnyvale District tour meeting, Broker Moise Nahouraii with Referral Realty – Cupertino, explained why.
Nahouraii noted technically, the region known as Silicon Valley includes San Mateo County, Santa Clara County, parts of Santa Cruz County and the cities of Fremont, Newark and Union City. The region has a population of about three million people.

Good news is employment in the region has officially reached full capacity (less than 5 percent unemployment). Who’s hiring? Top on the list is the professional, scientific and technical services sector, with 6.8 percent growth, followed by construction, 6.4 percent; and leisure and hospitality, 4.3 percent.
Not so good news is growth is expected to slow in 2018, or 2021-2025 because of the housing shortage, low housing affordability, transportation problems, all of which are impacting the quality of life in the region.
“Right now, transportation is all being patched up. We need a major revamping. People are traveling many hours just to get to work,” said Nahouraii.

According to the California Association of REALTORS® Housing Affordability Index, only 19 percent of households in Santa Clara County can afford to buy a median-priced home. An individual has to earn $194,720 to be able to afford a $965,000 median-priced home. According to, Nahouraii said even software developers, who are among the higher income earners making an average income of $114,794 are having a hard time affording a home.
The median monthly house payment of $4,870 is the same as rent. In fact, some rents are much higher, “so this is one reason your clients should try to buy if they can,” Nahouraii told SILVAR members.

Three million people in Silicon Valley would mean one million households, the use of more than 400 million gallons of water per day and over one million people commuting to work each day in their own cars. Nahouraii shared these findings from the Silicon Valley Institute of Regional Studies: “In conjunction with a lag of residential building to accommodate growth, housing prices in Silicon Valley have contributed to rise (in some cities up 20-30% year-over-year), rental rates have increased (+8.8% between 2013 and 2014), and nearly 40% of Silicon Valley residents are burdened (spending more than 35% of their gross income) by housing costs. These issues will intensify with population growth.”

Information from Plan Bay Area shows between 2010 and 2040 the San Francisco Bay Area is projected to add 1.1 million jobs, 2.1 million people and 660,000 homes, for a total of 4.5 million jobs, 9.3 million people and 3.4 million homes. If true, this would constitute a problem due to very low housing inventory.
Nahouraii said there is low inventory due to the shortage of land and high development costs. Also, people are staying in their homes 10 to 20 years versus five to seven years in the past due to Prop. 13, capital gains taxes are too high, reverse mortgages, step up buyers cannot find replacement property, the appreciation rate is so high they can’t sell, and rents are creating retirement income for some.

Posted on November 21, 2015 at 12:24 am by Debby Bright

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