Renters in Seattle and San Francisco are struggling to meet housing costs. A new survey from Refin has found that 40% of low-income households in the two cities are rent burdened, meaning that rent payments exceed 30% of their income.
The tech industry is driving the housing affordability challenges in both markets.
In San Jose, housing values have increased 46% to $1.1 million since 2015. In Seattle, housing prices are up 56% to $625,000. The markets also have a similar share of rent-burdened households. In San Jose, 41.3% of households earning 80% of the median-area income were considered rent-burdened, while in Seattle, 42.7% of households in the same category paid more than 30% of their income on rent.
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High-income tech workers have little challenge meeting the housing costs, both for home ownership and rentals. Tech giants have noted the problem and pledged significant capital to combat the housing cost challenges. Amazon alone has dedicated $2 billion to develop 20,000 total housing units for households earning less than 80% of the local median income in Seattle, Nashville and Washington, D.C.—all cities where the company has a major presence. However, Redfin says that this investment will make little impact. In Seattle, a third of the 20,000 units will only add 1% to the market's housing stock.
Redfin economist Taylor Marr notes that regions with a strong presence of tech companies, like both Seattle and San Francisco, have struggled to keep up with housing demand. However, the problem is hitting non-tech workers the hardest. In Seattle, only 2% of households earning the equivalent of an Amazon software engineer salary—$167,000 per year—are considered rent burdened. Redfin notes that these households are also likely choosing to pay more in rent because they probably couldn't find a lower-cost option.
Although these housing initiatives have only a small impact, Redfin says they could play an important role in curbing the severity of the problem. However, federal and local governments also need to play a role in solving the housing crisis. Joe Biden's new administration is taking on the challenge and plans to address housing inequality with initiatives like down-payment assistance, rental assistance and affordable housing development.
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Kelsi Maree Borland
