In October 2021, when Elon Musk announced that Tesla’s headquarters would move from Palo Alto to Austin, Texas, he explained that the reason went beyond his personal disdain for California.
“It’s tough for people to afford houses and a lot of people have to come in from far away,” he said. “There’s a limit to how big you can scale in the Bay Area.”
He’s not the only CEO to come to that decision. Since 2020, Oracle and Hewlett Packard Enterprise have moved their headquarters to Texas, with Apple, Amazon and Dropbox also opening offices there.
Tech leaders say that housing costs are stifling Silicon Valley’s economy, limiting companies’ ability to grow locally as workers — even highly paid engineers — say they can’t afford the lifestyle they expect in a region where the median home price has climbed 53% in the last decade to $1.9 million. The region’s failure to solve the problem is cited as a leading reason for companies seeking growth elsewhere, according to the recently released Silicon Valley Index.
From 2022 to 2024, the Bay Area lost jobs in core office and tech industries, with San Francisco losing 56,000 jobs and San Jose losing 18,300 jobs, according to data from the Bay Area Council. Meanwhile, cities like Houston, Dallas and Charlotte all saw employment gains.
The Bay Area’s top 20 tech employers — which include Google, Apple, Meta, Amazon, Cisco and Tesla, among others — added to their Bay Area workforce by 6% in 2024. But the region lagged behind Austin, where those employers added 11% more workers, and Seattle, which grew 15%, according to the Silicon Valley Index.
The key difference between Texas and California? Texas builds.
Austin, for example, issued 2,781 building permits per 100,000 people from January 2023 through November 2024 — that’s five times as many permits as San Jose, and 10 times as many as San Francisco.
That’s led housing prices to stay affordable to more workers. In Austin, homebuyers must earn $86,647 to afford a median-priced starter home, according to a 2024 study from Redfin. In the Bay Area, homebuyers must earn nearly $300,000.
Tech’s role in the Bay Area’s housing crisis is complicated. The boom in employment during the 2010s, driven by the tech sector, led to a major jobs-housing imbalance. Between 2008 and 2019, for every three new jobs created, there was slightly less than one home built, according to a study by the Manhattan Institute, a conservative think tank.
Now, the Bay Area is caught in a vicious cycle in which tech effectively sets the price floor for housing, Mirante said.
“Those working in tech with growing wages are willing and able to buy what limited housing stock does exist, creating a bidding war that middle-class and lower-income people cannot win,” he said.
Four in 10 Silicon Valley renters and homeowners spend more than 30% of their income on monthly rent or mortgage payments, classifying them as “cost burdened” by federal standards.
Tech salaries have grown more in line with housing prices in the Bay Area than for other employees. The annual mean salary for software engineers in California increased from $107,870 to $168,660 in the 10 years between 2013 and 2023 — a 56% increase. Meanwhile, the median salary for all occupations in that time increased just 39%, to $54,030.
But adding to employees’ salaries when supply remains mostly static has led prices to balloon, erasing much of the spending power they may have gained. The median price of a home in the nine-county Bay Area nearly doubled in that time frame, to $1.2 million.
“If you look at where most of the wealth has been created by the tech entrepreneurs in the U.S., much of that wealth has not gone to the entrepreneurs themselves or even the VC investors — it’s gone to the land owners in the Bay Area,” said Atta Tarki, founder of the executive-search and staffing firm ECA Partners.
“Companies that want to compete at the upper echelon know they have to be in an ecosystem where employees want to locate. And employees want to locate where the top companies and top peers are,” Mirante said. “It’s a symbiotic relationship.”
That’s what keeps Wayne Li here. The 29-year-old San Francisco software engineer could afford more space if he were to relocate to another city — or maybe even afford to buy a single-family home — but he doesn’t want to limit his career opportunities.
“The Bay Area is still the place to be for tech,” Li said.
While many other generations grew up with the dream of one day owning a single-family home, Li said he’s learned to adjust his expectations for living in the Bay Area.
“For such a long time, it’s been out of reach,” he said. “It just doesn’t bother me anymore.”
Still, many tech leaders are concerned that housing costs are chipping away at the Bay Area’s competitive edge, which has motivated them to support local pro-housing movements and candidates. Patrick and John Collison, the brothers who co-founded Stripe, are major supporters of the pro-housing lobbying group California YIMBY, alongside Yelp CEO Jeremy Stoppelman and Y Combinator partner Jared Friedman.
Other tech giants have made direct investments in affordable housing. In 2019, Apple pledged $2.5 billion to help with California’s housing crisis, with $1 million put into an affordable housing fund, $1 million going to a mortgage assistance fund for first-time homebuyers, and $300 million in land donated for affordable housing. That year, Google also announced a $1 billion investment in housing. Facebook and the Chan Zuckerberg Initiative, alongside other nonprofits, also pledged $500 million to a fund that aims to build and preserve 8,000 homes in the five-county Bay Area.