Even technology workers earning $190,000 (about 290 million won) a year in San Francisco, the heart of Silicon Valley, are grappling with soaring housing and living costs.
Artificial intelligence companies such as OpenAI and Anthropic are drawing large numbers of workers and capital into San Francisco, further intensifying the burden of living costs, according to The New York Times on Wednesday. San Francisco has long been notorious for its high housing costs, but the diagnosis is that the AI boom has created a new level of cost pressure.
According to the latest data from the Council for Community and Economic Research (C2ER) cost-of-living index, San Francisco's overall living costs are 65.6% higher than the national average. Housing costs are by far the main driver. According to real estate brokerage platform Redfin, the median home price in San Francisco surpassed $1.7 million (about 2.6 billion won) as of April this year. That is well over three times the U.S. national median price of $450,000 (about 690 million won).
The rental market is just as challenging. According to real estate data firm CoStar, the average monthly rent for an apartment in San Francisco was $3,827 (about 5.86 million won), surpassing New York to record the highest in the United States.
Nigel Hughes, a senior researcher at CoStar, compared the current San Francisco rental market to "a pressure cooker heating up fast." The apartment vacancy rate in preferred areas such as the Marina District, Pacific Heights and South of Market (SoMa) has plunged from about 13% in 2020 to about 3% now. New housing supply has effectively halted, worsening the supply-demand imbalance.
The housing burden carries over directly into other living costs. Based on the same cost-of-living index, utilities in San Francisco are about 41% higher than the national average, transportation about 43% higher and groceries about 19% higher. According to the U.S. Bureau of Labor Statistics (BLS), the average annual salary of San Francisco workers rose sharply to $196,365 last year from $153,359 in 2020, but factoring in the rise in living costs, the perceived increase in real purchasing power is assessed as limited.
With this cost structure compounded by expectations for AI company listings, the wealth gap and housing competition are expected to widen further.
Ted Egan, chief economist for the city of San Francisco, said, "High-income professionals have long been weighing whether to put up with the city's pros and cons, or to leave for outlying areas with a yard and a garage."
