Silicon Valley's Economy Is Booming, But So Is the Traffic

Silicon Valley is booming, and with it comes new real estate development, higher salaries and more traffic, according to a new survey released on Friday.

According to this year’s economic survey from Joint Venture Silicon Valley, commute times have increased by more than 20 percent over the past 10 years, adding an additional 43 hours of driving time per commuter annually. The report was released at the nonprofit’s annual State of the Valley event.

“It’s rolling now to a crescendo,” said Russell Hancock, CEO and President of Joint Venture. “Cities are also realizing that when they have employers in their boundaries it creates externalities, and one of those is traffic jams.”

The report also finds the cost of housing plays into the traffic problem. Over the past two years, the median home price has increased by $300,000, bringing it to $1.2 million last year. Compare that to $221,000 — the median price in the U.S. overall.

The number of homes on the market has also decreased significantly. In 2018, there were half as many home sales as there were in 2004.

“The inventory is at historic lows, people are actually holding on to their houses” instead of downsizing in retirement, Hancock said.

This adds up to more local employees — 95,000 in 2017 — who are forced to live so far away from their jobs that they end up commuting more than three hours a day. Caltrain ridership has reached an all-time high, but not everybody lives along the rail lines.

The cost of transportation needs in Silicon Valley rose by 4 percent over the past four years, after adjusting for inflation. This compares to a decrease in the cost of transportation needs of 12 percent statewide over the same period, according to the index.

But if housing costs and traffic are driving tens of thousands of people to leave the region, the migration out is almost exactly matched by the migration coming in. Silicon Valley lost roughly 22,300 people last year but gained roughly 20,500.

In Los Angeles, where congestion is old news, Mayor Eric Garcetti is overseeing a major transit plan to bring 100 miles of new rail line to the city.

“We’re really looking at what we’re doing with a once, not just in a generation, but once in a century investment in transportation,” Gracetti said during his keynote at the State of the Valley event.

But the report isn’t all doom and gloom. While Silicon Valley faces major challenges, there are still enormous opportunities.

The median household income here is higher than it has ever been. In 2017, it grew by 5 percent, bringing it to $118,400 annually. Unemployment is also fairly low, at 2.3 percent compared to 3.9 percent in California overall.

“Our success is greater than other parts of the country and our failures are greater than other parts of the country,” Garcetti said of Silicon Valley.

Unemployment for black or African-American residents has also decreased. It’s currently at 5 percent, which, though higher than the overall rate, is 7 percent lower than it was in 2011.