Fueled By Layoffs And Sky High Property Prices, More People Continue To Leave The Bay Area 

The number of people leaving or planning to leave the San Francisco Bay Area continues to outpace those that are looking to relocate to the city. Driven by an exodus of big tech layoffs, soaring property prices, and high cost of living, several sources, including data provided by the U.S. Census Bureau, revealed that more residents are planning to move to a different city. 

Results in a recent American Housing Survey conducted by the Census Bureau found that 8% of the city’s current population have been planning to move to different parts of the Golden State, or even to a different part of the country. 

Back in September 2022, SFGate reported that 18 percent of current residents in the local metro area plan to move to a new home in the coming 12 months. 

However, it’s not only the Bay Area that has seen a steady decline in local population throughout the last several years. Across California, roughly 500,000 people have already exited the state since the start of the pandemic back in 2020. Now dubbed as the California Exodus, the state has seen its population decline by 1 percent already since 2020. 

Driven by the high cost of living, soaring property prices, social dilemmas, including crime and quality of life, and more recently unemployment, both the Lassen and San Francisco counties have experienced some of the largest population declines, at 7.5% and 7.1%, respectively. 

Wealthy Residents Are Taking Their Billions Elsewhere 

While the city has experienced an overarching problem relating to a shortage of homes, affordable ones at most, the wealthy that once lived in the Bay Area have taken billions worth of local income with them. 

Back in 2020, roughly 32,000 people left the city, and in the year before that, even more than 39,000 residents packed up and relocated. In total, these two separate groups represent a combined $15 billion of income left within two years. 

Far more people are leaving than settling in the Bay Area. According to the Internal Revenue Service (IRS), which tracks patterns of migrations by checking tax filers' listed addresses, the city has experienced far fewer filings in the last several years than before the pandemic. 

In a further analysis by the Chronicle, analysts found that the average income of those that left averaged around $153,000, compared to those arriving that earned roughly $103,000 per year. 

Businesses have also been closing up shops in the city, with big box brands such as Nordstrom, Office Depot, Whole Foods, and Anthropologie, among others announcing the closure of some of their San Fran locations in the coming months. 

These closures might have to do with the soaring rents some of these brands have the cough up to open their doors to the city’s somewhat affluent residents. There’s also the fact that consumers aren’t opening their wallets too wide anymore, as inflation remains stubbornly elevated, even as the Federal Reserve closes off its monetary tightening policy. 

The Great Tech Bust 

Other economic problems that have taunted the city and its residents is the ongoing tech layoffs which have seen major big tech firms such as Google’s parent, Alphabet and Meta, among other household names cutting thousands of jobs in recent months. 

Since the start of last year, companies in the Bay Area, which has for decades been a hub for boisterous tech startups and firms have started laying off employees as venture capital funding and initial public offerings (IPOs) started to dry up. 

Proceeds and capital funding are down by 61% year-over-year following an EY report. While VCs have also pulled their interest in private funding for startups. On the back of this, IPO volume has already declined by 8%, only further adding insult to injury for local startups and companies ready to exit onto the public market. 

The majority of tech companies went on a frantic hiring spree during the height of the pandemic, as demand soared for tech and software services from businesses and consumers. Now with a steady decline in capital funding, and slowing economic conditions, many tech giants have been forced to slash thousands of jobs to stabilize their balance sheets. 

Estimates published back in May this year projects that close to 50,000 San Francisco-based tech workers and employees have already been booted, up from the 2,307 recorded during the same time last year. 

Among other household tech names, Salesforce (NYSE: CRM), Invitae (NYSE: NVTA) and Twitter were the companies that reported the biggest number of job cuts since last year January. Twilio (NYSE: TWLO) also announced that it will be slashing more than 2,000 of its workforce, while Lyft (NASDAQ: LYFT) reported more than 1,487 layoffs at the same time. 

Yes, other tech giants such as Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN) and Meta (NASDAQ: META) are also not yet out of the woods. Since last year, Facebook parent company Meta made some of the biggest, and most brutal layoffs. From the more than 21,000 employees that were booted by Meta since 2022, around 500 of those were in the Bay Area. 

Elsewhere, unemployment data for Santa Clara County, the exact location where you will find Silicon Valley, has been growing, reaching 3.2% in March 2023. In other Bay Area counties, including Alameda, San Francisco, and San Mateo, there’s also been an uptick in unemployment rates in recent months following data provided by Compass. 

Layoffs.fyi, a startup that’s been tracking tech layoffs since the start of the pandemic, calculates more than 147,000 tech workers have been booted between January 2022 and May 2023. In total, more than 197,000 techies have so far lost their jobs this year across the world. 

A city that once welcomed thousands of tech employees has seen its door shuttered in the wake of an ongoing economic slowdown, and shrinking capital funding. 

A Terribly Priced Housing Market 

The local housing market has also not been functioning normally for the last few years, despite the national composite readings for February 2023 being 4,9% below its June 2022 peak. 

In February this year, the national composite rose a modest 0.2% according to the Case-Shiller U.S. National Home Price NSA Index.

While national house prices have stabilized over the last several months, as the Fed's monetary tightening caused a cooling reaction, in the Bay Area, property prices are still 28% above what they were at the start of the pandemic. 

In San Francisco, the median house price according to the readings came in at $1,528,000, and $1,590,000 in Santa Clara. Readings provided by Compass show that the median house price in the Bay Area is nearly four times higher than the national median price of $375,000. 

According to the California Association of Realtors, median sales prices of existing family homes in the Bay Area continue to trend upwards on a month-to-month basis, with the median price standing at $1.25 million in April 2023. This remains above the levels recorded for the same period in 2020, when the median house price was $980,000, a month after the pandemic started. 

A further look at other data suggests that for an area that managed to make a comeback from the dot-com bust, property prices are still up by 130% since 2012. 

For would-be buyers that have been priced out of the property market, rental prices have also soared over the last several years, with the median rent for all bedroom and property types in the Bay Area now at $4,237 according to property aggregator Zillow. 

Compared to other major metropolitan areas, which have also seen rental prices steadily rise over the last several months, the Bay Area continues to outpace them. 

In places such as New York (18%); Washington D.C.; (66%); Los Angeles (41%); Austin; (77%) and Miami (16%) rent for all bedroom and property types remains relatively higher. 

Rental prices for all bedrooms and property types have declined since their peak of $5,300 in June 2022. However, for smaller studio, one-bedroom, and two-bedroom dwellings, rental prices have gone up significantly. 

Studio apartments are now $2,200; one-bedroom $771; and two-bedroom apartments $1,925 more than what they were compared between May 2022 and May 2023.

Those that have left the city in recent years have opted to relocate to cities across the country that offer them a better quality of life, more affordable cost of living, and a less heated rental or property buying market. 

According to reports by NBC Bay Area, the top five locations that former San Francisco residents have migrated to include Austin, Las Vegas, Reno, Miami, and Orlando. 

Other data from Redfin showed that outbound migration to cities such as Sacramento, Los Angeles, Seattle, San Diego, and Portland has seen the highest outbound migration, with 25% of home buyers in the San Francisco Area now looking to purchase property outside of the county.

Shaken by several turbulent years, tech layoffs, and now a property market that has priced-out potential buyers, San Francisco has become a desolate place for young and old residents that are eager to vacate the city. 

While there have been efforts from local governments to support more affordable housing initiatives, which could help stabilize the property market and provide better competition among would-be buyers, many aren’t willing to wait for these laws to pass. 

Although the city continues to provide countless opportunities for young startup entrepreneurs and more affluent income earners, the Bay Area has become a hard place to establish yourself as the country’s economy teeters on the brink of a recession. 

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