The San Francisco Bay Area had emerged as a key driver of the national economy.
Companies here compete for talent by offering flashy, modern offices and generous benefit packages. The wave of layoffs brought on by interest rates and the drying-up of venture capital has acutely targeted the tech sector, however, and has led to the cancellation of many high- profile projects. Higher interest rates have also caused new housing projects to dry-up, exacerbating the area’s already severe housing shortage.
The Bay Area already has one of the highest costs of living in the world. It is estimated that the area is short almost one million new houses, and workers commute from as far away as Sacramento or even Portland. This has caused many companies to set up shop elsewhere, where costs are cheaper. Forecasts have, in turn, been consistently revised downwards since the year began. We now expect the market to decline in 2023 and only see modest growth in 2024.