A good job, a good salary, but no home

In the high-tech world of Silicon Valley, success would seem clearly within Michael Wilton's reach.

He has a technical-education background. And he works as a radio-frequency technician at a company that builds wireless networks.

Yet all Mr. Wilton can touch right now are the shrunken borders of his life: a pine-frame bed that sits amid a sea of homeless at a shelter in San Jose, Calif., where 40 percent of the residents have jobs but no permanent home.

"I spent so much on housing, pretty soon I didn't have any more money," says Wilton, summing up a situation familiar to more and more people.

Silicon Valley and the technology it produces have been at the leading edge of America's record-breaking economic expansion of the 1990s. Yet here in the hot bed of what many call the "new economy," prosperity has taken on a peculiar warp.

While jobs and relatively high incomes are plentiful, and the stories of material excesses now legendary, the price of housing has rocketed beyond the reach of a growing segment of society.

"More and more people are being left in the dust of a dot com economy gone nuts," says Maury Kendall of the Emergency Housing Consortium, which runs the shelter where Wilton stays.

Some of these people slip into homelessness, though that remains rare and short-lived for most people with jobs. A greater number double or triple up in rentals and join waiting lists for affordable-housing units. And many are scattered by the centrifugal force of escalating prices into distant communities.

But Silicon Valley's housing crunch is only the most dramatic example of a growing gap between incomes and housing costs in many communities across the US.

"The places where the information economy has done really well, you also find real estate values have risen sharply," says Ed Glazer, an economist at Harvard University in Cambridge, Mass..

He says, for instance, that Boston and Cambridge are also seeing a similar discrepancy. And in Fairfax, Va., another technology center, the homeless population is reportedly rising dramatically.

While many futurists once predicted that locale would become less important in a wired world, technology hubs are actually in greater demand, says Mr. Glazer.

Nonetheless, Silicon Valley is a world apart. Nationally, 55 percent of households can afford the price of a median-priced home, according to the California Association of Realtors. In Santa Clara County, the heart of Silicon Valley, the figure is 28 percent and, by most estimates, worsening.

Even with mortgage rates rising, homebuying in Silicon Valley is brisk. Most homes sell within two weeks, receive multiple offers, and commonly sell for prices above the seller's asking price.

In Silicon Valley, the median price of a single family home is $400,000 (compared with $208,000 in New York). And rents in the region range from $1,000 to $2,500 for a one-bedroom apartment. Some have taken to renting floor space to people who settle for just a spot to sleep.

In nearby communities like Santa Cruz, the homeless problem is so severe that local officials are working on a plan to set aside parking lots where the homeless can legally live in their cars.

Two dynamics are at work, say experts.

First, housing stock is low and demand is high. While economists consider a healthy ratio of new housing units to new jobs to be about 1 to 1.5, in parts of Silicon Valley the ratio is 1 to 19.

The other dynamic is Silicon Valley's environment of speculative frenzy. In a gold-rush climate where new paper millionaires are created each day, much of that wealth is being funneled into housing.

Christina Hoerner doesn't even dream of owning a house. But as a local elementary schoolteacher making $31,000 a year, she expected to find rentals. Wrong. She's in an apartment that takes more than half her monthly paycheck. "I break even or lose money each month," she says.

Others are worse off still. A high school teacher who asked that her name not be used grades papers in a homeless shelter in Redwood City, Calif. Yet she remains upbeat: "You know you're here not because you're not successful, but because of causes that are not your fault."

Indeed, what some experts see at work in the housing shortage is a fraying social contract that worked for previous generations. "The premise that used to underlie public policy was that if you worked, did the right thing, you could afford a place to live," says Nick Retsinas, director of the Joint Center for Housing Studies of Harvard. "Now we find a disconnect."

The high cost of housing has a range of collateral effects that policymakers are beginning to address. It has forced many Silicon Valley workers into multihour commutes from cheaper housing. That worsens traffic and air quality, not to mention shrinking the time working parents have for their families.

In Santa Clara, where Ms. Hoerner teaches, "teachers are not staying in the system. Up to half of them are gone within three years" because of high rents, says Joe Kornder of the Santa Clara district.

The school district is moving forward with plans to convert an old school site into 40 apartments that would be available to teachers at well below market rates.

Affordable housing has crept up the agenda throughout Silicon Valley as government and the private sector search for solutions. Still, no one sees rapid progress on an issue where values collide. Part of the reason for Silicon Valley's meager housing stock is its dedication to preserving open land and environmental quality.

Some homeless advocates secretly wish for a housing collapse as the only way to reduce prices. But most people look for small gains and avoid the big picture.

As First Community president Timothy Nieuwsma puts it, "We feel like we're out in the ocean and there is no bottom."

(c) Copyright 2000. The Christian Science Publishing Society

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