“While it’s a chicken-egg situation which came first—the unchecked growth of the Silicon Valley tech industry, or Peninsula cities’ distaste for dense planning and development—it’s inarguable that the creep of the Valley’s housing shortage and sky-high costs places additional pressure on affordability in Santa Cruz. In 2015, theSanta Cruz Housing Elementreport cited “the heavily weighted jobs to housing ratio of neighboring Santa Clara County, [and] the wage imbalance with adjacent Santa Clara County” as significant influences on the Santa Cruz housing market. Santa Cruz’s proximity to the tech hubs of San Jose, Cupertino, Mountain View, and Palo Alto makes it an attractive bedroom community for Silicon Valley workers, who earn a median income on average $30,000 higher than workers based in Santa Cruz. Despite Santa Cruz’s status as the most unaffordable city in the US, median home prices are lower in Santa Cruz than they are just over the hill—in 2018 the median home price in Santa Cruz was over $900,000, while in Cupertino it was more than double, at over $2 million,according to Zillow. In 2017, Silicon Valley’s Santa Clara and San Mateo counties added 47,000 new jobs, many in lucrative tech fields, while allowing only 12,000 new residential units. This gap leaves tens of thousands of deep-pocketed tech workers looking elsewhere if they choose not to squeeze into dorm-style tech incubator housing, or pay upwards of 50% of their generous incomes in rent. Their housing search in turn has consequences for communities throughout the Bay Area, from San Francisco to Salinas.
For many years, the winding, narrow, and accident-prone Highway 17 that’s the only direct route between Santa Cruz and the Valley dissuaded commuters looking for a lower cost of living. Public transportation from Santa Cruz to other parts of the Bay, while available, is relatively arduous, requiring at least one, if not two transit system or modal transfers, and double the time commitment of driving. Since at least 2012, however, many tech companies, including Apple, Google, Netflix, and Yahoo!, have been running company shuttle buses over 17, providing their workers wi-fi-equipped luxury coach rides between Santa Cruz and their corporate campuses. The presence of new young techie residents, enabled by a comfy and free commute, has contributed to Santa Cruz being seen as a relatively affordable base for startups and satellite offices of larger companies. Since 2014,Santa Cruz Works, a new economic development agency, has been promoting Santa Cruz as a prime location for founders and VCs, arguing that basing IT companies here eliminates long commutes, lowers real estate and housing costs, and provides a relaxed, beachy quality of life. In the past five years, the number of IT companies and startups in Santa Cruz, many of whom relocated from San Francisco or Silicon Valley, has increased rapidly. In 2015, Santa Cruz’s status as a regional tech hub solidified when Amazon quietly set up a local office, that now hosts more than 100 jobs, many reportedly assigned to Amazon’s flagship Alexa/Echo platform. While these new high-wage jobs bring benefits—a larger tax base, increased local consumption—they also brings greater demand for housing, and new residents with an ability to pay far higher prices than locals can afford.
