Northern California labor markets are rapidly tightening, putting additional pressure on business costs and demand for housing. Strong employment growth has driven down the area unemployment rate to 4.3 percent in March. The declining unemployment rate is coinciding with an increase in the labor force, indicating a strong and healthy labor market. As labor markets continue to tighten, this puts upward pressure on income growth as businesses use more competitive compensation packages to keep or gain workers. As compensation and job opportunities increase in Northern California, job seekers follow, boosting demand for homes. This reinforces a cycle of high costs of labor and high costs of living, to which both businesses and laborers are incentivized to find more affordable accommodations.
Initiatives in San Francisco are attempting to address the issue of affordable housing within the city. Strada Investment Group along with site owner Local 38 Plumbers and Pipefitters Union and non-profit Community Housing Partnership have submitted paperwork on a development project in the Mid-Market area. This project will combine both market price housing units and supportive housing units for those who are exiting homelessness. If this project is successful, it can serve as a catalyst for future projects between private development groups and non-profits to attempt to address the housing needs of the city’s impoverished. Another initiative will go to the polls this November. Mayor Ed Lee proposed a $250 million housing bond. The majority of the funds would be allocated toward low-income and public housing. Approximately $25 to $100 million would be used to support subsidizing new middle-income rental and housing.
Governor Jerry Brown issued an executive order to reduce urban water usage. San Francisco must reduce per capita water usage by eight percent while San Jose is using water rationing to hit a 30 percent reduction.
Click here for the complete Northern California Regional Economic Update: NorthernCA2015Q2.