Cost of housing is a drag for jobs

The consulting firm Beacon Economics assessed the state of the Bay Area’s financial bearings on Monday. They conclude that the boom times are quieting to an echo, thanks in part to housing costs.

Oh, jobs are still on an upward trend. But they’re smaller gains than they have been, with even shrimpier returns projected for the near future, somewhere between one and one and a half percent.

Meanwhile, the Beacon analysis points out that “a mere 13% of San Francisco County residents were able to afford the monthly payments on a median priced home.”

Actually, that might even be a slightly generous assessment. The California Association of Realtors projects that you need to be making about $252,000/year to afford a home in San Francisco.unknown

While the US Census tells us that the number of people making more than $200,000 annually became the largest income bracket in San Francisco in 2015, it still only accounts for 20 percent of the population.

Of course, you can rent for about half of what CAR estimates is the monthly cost of a standard SF mortgage ($6,310).

But probably not that many people are making $125,000/year either—the Census says the city’s median income is just over $92,000. (Although admittedly the mean is much higher: $134,000.)

“As the rising cost of living in the area chips away at wage advantages, net migration is expected to dramatically decline over the next few years,” writes the Beacon team

Which would mean hiring would become a problem for certain companies. Of course, job numbers are never as simple as just one variable. The tech sector has been dogged with tepid news about IPOs and lack of capital all year, for example.

Still, Beacon has always held that housing is the heaviest drag on job numbers, even during good times.

“It’s safe to say that it’s the biggest detriment,” Beacon spokesperson Victoria Bond told Curbed SF. “There are other factors, but we’ve always contended that housing is the single largest threat to economic growth.”

That’s just one firm’s prediction. But Sacramento’s Legislative Analysts Office said much the samein 2015, warning that “high housing costs [prevent] the state’s economy from meeting its full potential.”

And it seems to make sense. Consider that San Francisco’s labor force increased 27,200 people over 12 months. Notice that this is more than twice the projected increase in our residential population.

We can’t say for sure that all of the remaining 15,000 workers or so would prefer living in the city to wherever they are instead. Or that another 27,000 somewhere wouldn’t move here if they could.

But we could lay fair odds on it.

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