The South Bay’s Housing Conundrum: A Recipe for Disaster?

As the tech industry continues to boom, the South Bay area is facing a severe housing shortage. According to expert economists, the region must ditch empty office buildings and replace them with housing to accommodate the influx of cutting-edge tech jobs, including those in artificial intelligence.

“How do you make housing more affordable? You build more housing,” says Thornberg, economist and founding partner with Beacon Economics. This sentiment echoes the sentiments of many who believe that the key to solving the housing crisis lies in increasing the supply of housing.

The South Bay area is home to some of the world’s most innovative tech companies, but the lack of housing is threatening to stifle growth. Thornberg urges San Jose and its neighboring suburbs to intensify efforts to rezone wide swaths of commercial properties, allowing housing to sprout on those sites.

The South Bay’s office buildings could be replaced with housing units

“You need to start taking down these office buildings and putting up apartments,” Thornberg said. This drastic measure may be the only way to address the severe housing shortage that is plaguing the region.

Despite the doom and gloom, Thornberg remains optimistic about the South Bay’s economy. “California is not dead yet,” he said. “California is doing just fine.” The Beacon Economics co-founder asserts that the South Bay economy is also in good shape, but like California, must navigate past some hazards to remain robust.

The South Bay’s tech workers need affordable housing

The boom part of Silicon Valley’s boom-and-bust cycle has always been fueled in large measure by tech workers who are relatively new to the industry. Thornberg believes that’s why plenty of housing must be available for tech’s new workforces.

“Tech hubs are rejuvenated by young people coming into them,” Thornberg said. “Where are they going to live?”

While the South Bay economy is in good shape, Thornberg warned that the region’s housing crunch could impede future growth. “The limited amount of housing supply is preventing the hip new tech companies from locating here,” Thornberg said.

San Jose remains the globe’s primary creator of tech jobs

Despite the obstacles and difficulties, Thornberg believes the respective economies of the South Bay and California are both in good shape. He added that a recession is not on the horizon for the South Bay, California, or nationwide.

The San Jose region, Thornberg maintains, remains the globe’s primary creator of tech jobs, in Thornberg’s view. “There is no doubt that San Jose remains a Cadillac economy,” Thornberg said. “This is still the center of the tech world.”