-> Writing -> Silicon Valley Housing
I wrote this intending to publish it in the Washington Post. The editor there asked for some changes that I never got around to making, and now the facts are all out of date. Furthermore, the dot-com shakeout, while it hasn't changed the basic premises of this article much at all, has taken a little of the edge off of the problem. So, I'm retiring the article to this spot.

Housing: Silicon Valley vs. Metro D.C.

The media seem to spend a great deal of time examining the phenomenon of Silicon Valley. For many years, they have enjoyed celebrating the image of Silicon Valley as the world's greatest technology- and wealth-generating engine. More recently, with that story mostly having been told, the press has begun to focus more on the dark side of the Valley, particularly the increasing difficulty of finding and affording housing.

Santa Clara County is more or less synonymous with the area we refer to as "Silicon Valley." The median home price there in 1999 was $399,216, more than double the median of $184,525 in the Washington area. The average household incomes of the two areas are roughly equal (and both are substantially higher than the national average). As a result, only 27.5% of Santa Clara residents can afford the median-priced home, compared with 74.6% in the Washington area and 63.4% nationwide.

The Washington area appears to be making the upturn in the same growth curve that started Silicon Valley's latest boom. Few would argue that this incredible growth of innovation, jobs, and wealth is a bad thing. Despite the housing market, Silicon Valley is one of the most economically powerful forces in the world, and probably the most technologically powerful. Most of the people there are happy and proud to play a part in defining the world's future. The same sort of growth is generally viewed as a harbinger of good times ahead for Washington.

But there are those who fear that housing prices in the Valley are approaching a level that will deter job- seekers from relocating there, which would threaten the very root of Silicon Valley's prosperity. Certainly these inflated housing prices have a detrimental effect on quality of life for many residents. Here at the cusp of that kind of growth, we must wonder whether Washington is destined for the same fate. So far, it seems not. Despite the fact that the housing market in Washington has definitely gotten tighter recently, housing prices over the last three years have not even increased as quickly as those of the nation, and have not even come close to matching the rise in Silicon Valley housing prices during the same period.

One can argue that many of the factors that caused this explosive growth in Silicon Valley home prices are not present in Washington. A tremendous imbalance of housing supply and demand there is caused by a housing shortage that predates the current boom; there have been more new residents than new housing units for many years, and development cannot even nearly keep up with the constant population influx. D.C. has no such problem. Silicon Valley's real estate is geographically bounded by the San Francisco Bay to the North, the Pacific Ocean to the West, the Santa Cruz Mountains to the South, and the Milpitas Hills to the East. Thus, land there is a strictly bounded resource. Washington, on the other hand, has nearly limitless room to sprawl out into the Virginia and Maryland countryside, limited only by how quickly the infrastructure--roads, schools, and the like--can be built to support such expansion. Most of Silicon Valley's jobs are located in a geographically small and centralized region, whereas Washington has many such regions spread over a large area: for example, the Dulles Toll Road and I-270 corridors, Tysons, Rosslyn/Crystal City, and downtown D.C.

On the other hand, Washington-area companies, like many on the East coast, have been far slower than those in Silicon Valley at embracing alternative work styles such as flex-time and telecommuting, which help to ease the geographical burdens that cause high home prices. Also, California has tax laws in place that keep current residents from being priced out of their own homes because they cannot afford the taxes on the ever-rising real estate assessments; Washington, Maryland, and Virginia have no such protections.

The boom in which the Washington area has found itself is a wonderful thing, but we must take great care that we preserve our quality of life, which is inextricably linked to the affordability of housing, and which is the one thing that truly sets us apart from Silicon Valley.


  • Housing Prices Surge, San Jose Mercury-News, 5-26-2000.


  • Washington and Silicon Valley median home prices: Excel spreadsheet from "The Cost of Living in Silicon Valley," San Jose Mercury News, 1999.
  • Silicon Valley mean household income: [FIND REFERENCE], San Jose Mercury News.
  • Washington mean household income: Greater Washington Initiative. See also this Excel spreadsheet.
  • Also, Washington and Silicon Valley after-tax mean household incomes: The Washington Post.
  • Home affordability statistics: National Association of Home Builders (3Q1999 data, compiled by NAHB from First American Real Estate Solutions transaction data).
  • Silicon Valley threatened by increasing home prices: Elizabeth Gardner, "Silicon Valley Home Prices Threaten Net Startups," Internet World, 20 April 1998.
  • Rates of rising home prices: National Association of Realtors.


  • "The Cost of Living in Silicon Valley: A San Jose Mercury News Special Report."
  • Broderick Perkins, "Grim Realty: Housing Prices Drive Residents Out of Silicon Valley," San Jose Mercury News, 27 February 1998.
  • Nita Lelyveld, "Housing Prices Go Through Roof in Silicon Valley," Philadelphia Inquirer, 15 August 1999.
  • "Silicon Valley's Internet Leadership Threatened," Internet News, 22 July 1999.
  • Craig Wilson, "Silicon Valley's Nightmare Home Prices," USA Today, 24 August 1999.
  • "Silicon Valley Projections 99: Housing," Association of Bay Area Governments.
  • "Silicon Valley Projections 99: Population and Job Forecasts," Association of Bay Area Governments.
  • Jennifer Sullivan, "Silicon Valley Space Crunch," Wired, 27 April 1998.
  • "The Complete Guide to [Silicon Valley] Apartment Ad Deciphering".