by WorldTribune Staff, July 18, 2019
What kind of housing does $100,000 a year get you in the tech hubs of Silicon Valley and San Francisco? As motivational speaker Matt Foley would say — “jack squat.”
Foley, a Saturday Night Live character played by Chris Farley, was known for the line “I live in a van down by the river.”
Homelessness in the greater Bay area is not just for the down and out.
One formerly homeless Venice van dweller opined: “Bottom line, being homeless requires people to do sketchy things to get shelter and sleep.” She said, “Without those, it’s hard to keep it together.”
“Sketchy things,” the Hoover Institution’s Lee Ohanian wrote, “will continue to occur in California’s housing markets as more and more people try to live in the state’s most expensive locations without the incomes to afford housing. State and local officials can’t seem to agree on policies to expand housing supply in California, nor do policymakers have a plan for the state’s 125,000 homeless. This is déjà vu, all over again.”
With the average monthly rent in Silicon Valley and San Francisco at $3,250 per month, tech workers who wish to reside near their workplaces are buying or renting vans to live in.
“It takes an annual income of about $130,000 to qualify for renting the average apartment (less than 800 square feet of living space) in the technology hubs of Silicon Valley and San Francisco,” Ohanian noted. “This minimum qualifying income is at the 93rd percentile of the U.S. earnings distribution and is nearly $60,000 higher than the median salary for individuals in San Francisco.”
For those either not able or not willing to pay the market-rate rent, “van living is now a go-to choice for a number of Californians, including highly skilled workers earning six-figure salaries,” Ohanian wrote.
An entry-level Google software engineer “purchased a van to live in to economize on living expenses and reduce high student-loan debt. The engineer used his Google signing bonus to buy a 2006 Ford van that he could call home for $10,000,” Ohanian wrote.
“Keeping the van parked in his employer’s parking lot, he could eat all his meals at Google, do his laundry there (yes, apparently Google has laundry facilities), and use the Google gym for its showers and restroom facilities. The van had 157,000 miles at purchase, but high mileage was not the critical factor. Rather, it was how much ‘living space’ the van provided. The engineer’s 16-foot Ford provided him with 128 square feet, yielding more personal space than he would have had if he were sharing an apartment near Google.”
Other Silicon Valley van dwellers started a Reddit online forum which now has roughly 40,000 users across the country.
“In fact, ‘van living’ is sufficiently popular that organized markets have sprung up in expensive cities with the best job opportunities,” Ohanian noted.
Gary Gallerie, otherwise known as the “Vanlord,” lives in a van in Venice, California, which is located in westernmost Los Angeles alongside the Pacific Ocean, and which is home to major satellite offices of Google and Snap Inc., among other tech leaders.
The best neighborhoods in Venice command similar rents and home prices to those in Silicon Valley. Gallerie owns another 14 vans, which are parked throughout Venice’s residential streets. Gallerie advertises these vans for rent on Craigslist and other online forums and charges $300 per month.
“The reason why housing is so expensive — and why a market in ‘van apartments’ has sprung up — is that supply has not come close to keeping up with demand in the California locations with the highest-paying jobs,” Ohanian noted.
For example, San Francisco on average has the state’s highest salaries. In 1950, San Francisco’s population was about 775,000. Since that time, California’s population has grown by about 275 percent, whereas San Francisco’s population has grown only by about 15 percent, as there has been almost no net increase the city’s housing supply.
“These trends illustrate not only how grim the housing market has become in many California coastal cities but also that the situation is simply unsustainable,” Ohanian wrote. “Supply does not expand in these locations, because interest groups fight development for their own gain.”
Traditional housing — four walls, a roof, and a foundation — “is severely constrained, so the supply expansion that does emerge is nontraditional, and it is creating economic opportunities for those who never would have imagined that they would be in the ‘housing’ business, such as ‘Vanlord’ Gary Gallerie and the owners of old, large vans who are now profitably selling vehicles that were a blown water pump away from being towed to the scrap heap.”
But, Ohanian noted, “what creates economic success for some creates economic losses for many others. Vans parked in residential neighborhoods take away parking from residents, many of whom don’t have off-street parking. And van-livers often empty sewage and trash into gutters. This is leading residents in several Venice neighborhoods to create ordinances that prohibit living in a van overnight. But enforcement is difficult, since police must see a person living within the van to require that the van be moved.”