Do you know the way (to stay) in San Jose?


Much of the world will forever know San Jose, Calif., not as the “Capital of Silicon Valley,” but as the longed-for destination in Dionne Warwick’s 1968 hit, “Do You Know the Way to San Jose?” The song, which flew to the top of the charts and sold more than a million copies worldwide, celebrates “a place where I can stay … and … find some peace of mind.”

In 2015, those goals are much more elusive. Start talking with anyone in this city of a million — from the homeless to hometown executives — and all conversational roads lead to housing. The conversations are usually less around the where, but the how: How many jobs do you work to afford your place? How far is your commute? How much over the asking price did you pay?

On one end of the market, San Jose/Santa Clara County hosts the nation’s fifth-highest homeless population, according to the U.S. Department of Housing and Urban Development. Until recently San Jose was home to “The Jungle,” one of the largest homeless encampments in the nation, until the city closed it — this in the center of Silicon Valley, home of groundbreaking innovation that is changing our world.

On the other end, San Jose real estate prices experienced a 10.3 percent price increase in just the last year. Homes now clock in at a median price of $899,500, according to the National Association of Realtors. The rise is due in part to the latest successful circle of life here — startup to IPO — and the “inability to build much new housing,” according to Black Knight Financial Services, a real estate data firm. Employees are commuting from farther and farther away and, in some cases, turning down jobs in San Jose for more affordable cities.

At Knight Foundation, we view this housing challenge through the lens of talent. Specifically, how can cities attract, keep and harness talent, which, we believe, is a key driver for the success of any place. As recent transplants to San Jose, my wife and I are experiencing this question firsthand.

In our three months of searching for a home here, we have seen the pity in the faces of potential real estate agents when they know our modest-for-San-Jose budget and modest asks: something walkable with no carpets (both surprisingly difficult to find here). One agent even asked us, quite seriously, “Have you considered commuting from Sacramento?” — a city 120 miles away.

No, we haven’t.

Instead, we have crowded into open houses only to find the house already sold for 20 percent over asking. We learned from RedFin that 40 percent of San Jose homes were purchased last year for cash or waived financing. We were advised to just accept houses as they are, given that sellers need not address issues like cigarette smells or gaping structural failures in this red-hot market. We have even explored renting, only to discover an airline-like pricing system with apartment rates changing daily based on market trends. Add to that few leases lasting longer than 14 months and no rent control. “Your rent probably won’t go up more than 8 to 12 percent next year, but I can’t guarantee that,” one leasing agent told us.  

As we look to our peers in San Jose for advice, we find a mix of exhaustion, scrappiness and déjà vu. This is not their first overheated-housing-market rodeo. Ask about 1988, 2000 or 2007 and everyone has stories and scars from the boom-bust nature of this housing market. Now, in 2015, we are finding people moving farther into the exurbs, working two or more jobs to afford whatever they can find, or, most likely for young people, choosing to pay their real estate premium to San Francisco or Oakland in exchange for a “better quality of life” — that is, in addition to three-plus hours of daily commuting.

We have witnessed the hustle of many of those who do stay in San Jose. In our current rental building, we were amazed by all of the San Jose State University graduate students living in $3,000 one-bedroom apartments. The economics made more sense when the fire alarm went off at 5 a.m. one day and six to eight people filed out of many of the apartments, which were lined with bunk beds. In another case, a friend recently invited me to his “home,” a $300-a-month office in downtown San Jose. The building, one of many I’ve since learned, serves as home to scores of young people — and even a few families — capitalizing on cheap office space and showers at nearby gyms.

I want to believe that in some way these housing hacks will help encourage more creativity and innovation during our latest housing crisis. Given this region’s history of sprawling growth, not-in-my-backyardism, weak public transportation, limited housing stock and unremarkable architecture, we can certainly use the help.

In fact, we should be getting more of it — especially given our neighborhood, Silicon Valley.

We live in a region that strives for the best in technology, efficiency and innovation in everything, except, of course, when it relates to where we live. With neighbors like Peter Thiel who believes that death is a problem that can be solved, and Elon Musk seeking to colonize Mars, solving our area’s housing crisis should be a small task for a budding entrepreneur or bored billionaire.

After all, why should we limit our expectations of design and user experience to our phones, and not our homes? Why are we constantly innovating with microchips, and not microhousing? Why do we lament the long transfer time of file sharing, but take as a given our long transfer times to and from the sprawling exurbs?

In the future, as the song portended, more and more people will find their way to San Jose — the population is expected to increase 23 percent by 2040 – for innovation, diversity and 300 annual days of sunshine.

Moving forward, Knight will continue to support this city’s long-term growth and ongoing talent retention, but the enormity of the housing challenge requires the bold ideas, disruptive partners and innovative leadership in San Jose and across Silicon Valley. We must work together to figure out how we all will stay once we’ve found our way to San Jose.

Daniel Harris is the San Jose program director for Knight Foundation.