The historic tower of the Bank of Italy in downtown San Jose. (Photo: George Avalos/Bay Area News Group)
Wealthy residents freed from their offices by remote work are leaving the Bay Area at a higher rate than before the pandemic. The trend could exacerbate the region’s slowly recovering employment centers and the dreaded economic “loop of fate” in the downtown core.
Households with incomes of $150,000 or more will account for 32% of all households moving out of the nine-county Bay Area in 2021, up from 27.6% in 2019, according to new data. Analyzing Census Data By Bay Area Council Economic Research Institute.
Most of the retirees are low-income residents struggling to cover the region’s high housing and living costs, but an increasing number of wealthy households moving is beginning to squeeze the local tax base. said Abby Reyes, director of research at the institute.
“The impact is really serious,” said Raisz. “To break this vicious cycle, you have to start thinking pretty creatively.”
Downtown Bay Areas grappling with how to accommodate closed businesses and empty office buildings are also facing less money flowing into public budgets for essential services and transportation. Multiple challenges could force cities to dig deeper holes during times of economic uncertainty.
Between 2019 and 2021, the population of the San Francisco metropolitan area, which includes the East Bay and the Peninsula, declined by 2.3%, while San Jose’s population declined by 1.9%. More people moved away, but declining births, rising mortality, and less migration to the area were also contributing factors.
According to a recent census report, median household income in the San Francisco metropolitan area fell 4.6% to $116,005 annually during this period. This reflects the loss of high earners. Find more affordable places that offer a different lifestyleData for San Jose is not included in the report.
regional Last year’s downward trend in population slowed significantlyWith the surge in international immigration after the plunge during COVID, the shift to remote work means more white-collar workers can continue to say goodbye to the Bay Area.
That’s the case for 50-year-old Saji Kumar, who works as an advertising and branding consultant for a tech company and owns a house in Livermore. He and his wife are considering moving somewhere in the mountains of Arizona or New Mexico. There, you can buy a cheaper home and set aside savings for early retirement.
“Living in the Bay Area doesn’t do us any good,” Kumar said. “You can sit anywhere in the city where prices are cheap as long as you have good Wi-Fi.”
California remains the top destination for people leaving the region, with Los Angeles (12% of movers), Sacramento (11%) and Santa Cruz (4%), according to an Economic Research Institute report. . Some have moved to more affordable towns in the Bay Area suburbs, such as Tracy and Hollister, Reyes said.
Russell Hancock, chief executive of the civic nonprofit Joint Venture Silicon Valley, said even as more white-collar workers move and tech companies lay off thousands of local employees this year, the Bay Area will continue to grow. said it remains a “place of innovation.”
“Yes, people leave, but businesses don’t. This is very important,” says Hancock. Notable exception? Tesla has moved its headquarters to Texas, but still maintains a sizable workforce in the area.
But fewer people, even occasionally, have meant that these companies are cutting back on office space, and employees are being forced out of the shops, restaurants and bars of local recruitment centres. are reducing their spending.
“We’re not generating sales taxes like we used to, and we have a loop of fate downtown,” he said.
Already, most of the region’s major cities, including San Jose, Oakland, and San Francisco, are projecting budget shortfalls next year. Also, the hit to the city’s coffers could make it harder to mitigate homelessness and crime. What the Raisz Institute found is the most important issue for residents and business owners about Bay Area cities.
Raisz said the city is looking at new ideas to revitalize its downtown. Converting vacant office buildings into residencesBut with more office leases expiring in the next few years and many small businesses at stake, civic leaders will need to act quickly to prevent a vicious cycle.
“By 2025, the deficit could get even worse,” she said.
