The Bay Area's fevered success is still rising, but its achievements continue to exacerbate the region's housing and transportation pressures, a new Joint Venture Silicon Valley report, the 2018 Silicon Valley Index, found.
The 92-page report, which was released on Wednesday, found that Silicon Valley has gained jobs, income, venture capital and commercial construction. But longer, more frustrating commutes, struggles to find affordable housing, and higher costs for necessities such as food, clothing and child care are affecting quality of life.
The annual study, which looks at trends in the region's economic development, housing, workforce, education, public health, land use, environments, government and other sectors, found that Silicon Valley is still a hotbed for economic growth. Unemployment is at a historic low, at 2.5 percent, the lowest since 2000. The region created 47,000 new jobs created in the year between the second quarters of 2016 and 2017.
The index identifies the region as Santa Clara County plus adjacent parts of San Mateo, Alameda and Santa Cruz counties. Since 2009, however, it has added data for all of San Mateo county to reflect the geographic expansion of regional driving industries and employment. It also includes some data for San Francisco because of its influence on the tech economy.
People are also getting richer. Average annual earnings were $131,000 in 2017 and median household income outpaced inflation by up to $110,000, which is higher than any year since 2001, according to the report.
But the valley's success has a dark side that is disenfranchising many, and the report raises many questions about how the valley can provide necessary infrastructure to support its growth, including adding housing stock and encouraging young people to stay in the area by ensuring it is affordable for them to stay.
"Our spectacular success has created a harsh environment for families. Housing is out of reach for all but a very few, Those who can't afford to are living challenging lives, or commuting from far-flung places, spending ghastly amounts of time in traffic," said Russell Hancock, CEO of Joint Venture Silicon Valley and president of the Institute for Regional Studies, which jointly authored the index, in a press release.
Middle-wage, middle-skill jobs are disappearing and income inequality is growing more pronounced each year, he said.
"Today nearly a third of Silicon Valley households require some form of assistance in order to get by, and 10 percent of our residents are food insecure," he said.
Housing costs have continued to rise. The median home price in 2017 rose 7.4 percent, nearly $67,000, and median apartment rentals have risen 37 percent since 2011. Child care rose by as much as 31 percent since 2012, the study found.
The valley's demographics are also changing. About 38 percent are now foreign-born and 51 percent speak a language other than English at home.
For the second year in a row, people are moving out of the valley as quickly as they are moving in. Over a two-year period from July 2015 to July 2017, 44,732 foreign immigrants moved in while 44,102 residents moved to other parts of the state or country.
The valley is also aging, with residents older than 65 having risen 31 percent over a 10-year period, according to the index. The age shift is partially attributable to declining birth rates. In 2017, those figures were lower than in any year since the mid-1980s. Women with a bachelor's degree or higher are also waiting an average six years longer to have their first child.
Silicon Valley has 9.6 percent of the state's jobs, 34.6 percent of initial public offerings, 47.5 percent of patent registrations and 40.2 percent of the state's venture capital. San Francisco alone accounts for 15.4 percent of those IPOs, 31.3 percent of the venture capital and 45.7 percent of angel investment.
While the region has continued to grow, it is doing so at a slower pace over the past two years compared to the three years prior. More than half of new jobs -- 53 percent -- are in health care, retail, construction and education. Health care accounted for 17 percent alone, according to the findings. The tech sector grew by 29 percent.
Silicon Valley incomes are also higher than elsewhere in the state and the nation, but so are costs. The valley's average annual earnings of $131,000 far outstrip the state average of $78,000 and the nation's which is $66,000.
The median home sale price is 2.1 times higher than in other parts of California, with rents being 1.3 to 1.4 times higher. Child-care costs are 1.2-1.3 times higher and other essential costs, such as food, clothing and transportation, are 1.1 times higher. Inflation-adjusted median home prices rose 7.4 percent compared to 3.7 percent for the state.
Median apartment rentals have declined by 5 percent since 2015, but they are up 37 percent or $9,200 per year since 2011. Although household income has increased by $13,400 since 2011, the fast rise in rental rates represents a "burdensome share" of 69 percent of the income gains, the index noted.
The share of the valley's wealth is also skewed in favor of whites, with some ethnic groups suffering poverty at nearly three times the rate of whites. One out of every 10 children in the valley lives in poverty, and 30 percent of all Silicon Valley households still do not earn enough to cover basic needs without public or private assistance. More than one-third of Silicon Valley students ages 5 to 17 receive free or reduced-price school meals.
The median home price is now $968,000, making home ownership nearly impossible for most residents to get into the market, the index found. Fewer than 34 percent of first-time home buyers can afford a home compared with 49 percent statewide. Multiple-family units represented 79 percent of new building permits, but only a small number are affordable for low-income residents. In 2016, the high cost of housing has pushed nearly a quarter of the region's residents into multigenerational households, and more than one-third live with their parents.
The study also faulted the housing crunch with traffic congestion. Commute times have increased by 17 percent, adding an average travel time of 43 minutes per week per commuter. Delays have more than doubled on the past 10 years, reaching a record-breaking 66,000 wasted vehicle hours daily for commuters. Ridership on private shuttles now represents the Bay Area's largest mass-transit system, with the majority of shuttles traveling between San Francisco, Santa Clara and Alameda counties, the study found.