Silicon Valley Needs Houses

A blog about business and economics.
May 3 2013 2:26 PM

The Whole Problem Is That There Is No Housing Boom In Silicon Valley

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Apple employees walk toward Apple headquarters to attend co-founder Steve Jobs' memorial service in Cupertino, Calif., on Oct. 19, 2011.

Photo by KIMIHIRO HOSHINO/AFP/Getty Images

The enormous wealth that's pouring into Silicon Valley ought to be trickling down to at least some extent as a vast array of local service providers gain jobs and income as chefs, waiters, doctors, nurses, yoga instructors, gardeners, interior decorators, taxi drivers, accountants, opthamologists, tailors, and housekeepers to the new money elite. Instead, Norimitsu Onishi writes that "the tech boom is also sharpening income inequality and fueling a housing boom that is squeezing families out of many Silicon Valley communities."

He's right on income inequality, but he's dead wrong on the housing boom. An anecdote about "the transformation of Palo Alto’s last mobile home park into luxury apartments" misses the big picture—all of the incredibly expensive land in Palo Alto (and Menlo Park, and Mountain View, etc., etc., etc.) that isn't being transformed into apartments.

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What should be happening in Silicon Valley is an enormous construction boom. There should be oodles of blue-collar jobs knocking down suburban-style single-family detached homes and replacing them with attached townhouses. Right by Caltrain stations, there should be huge apartment towers going up. Some people might get dispaced out of the individual house they live in, but generally should be able to afford to stay in the area. And more broadly, individual instances of displacement should be swamped by the kind of localized population boom. If you look at a community like Williston, N.D., or the Odessa/Midland area in Texas, that's what's happening. An influx of money into the oil industry is fueling an influx of people and a surge in construction.

But not Silicon Valley. In the technology capital of the world, we're making very scant use of the technologies of steel frame construction and elevators. Land is scarce in the corridor running between I-280 and US-101 from San Jose up to San Francisco, but it's not all that scarce. It's just not being used very intensively. Because zoning generally mandates low-density uses and because the California Environmental Quality Act perversely hyper-empowers NIMBYs to block projects even though California's pleasant climate makes it one of the most ecologically sustainable places for new housing to go. There is no housing boom there, but the region—and the country as a whole—would be a much better place if there were.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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