Housing Costs Limit Pool of Job Candidates

Though hiring remains flat in California’s Silicon Valley, the region’s high housing costs are rattling company leaders and prompting recruiters to look for talent closer to home.

In a recent survey by the Silicon Valley Leadership Group, 68 percent of area executives cited high housing prices as the top business challenge–above onerous regulations, workers’ compensation costs and even health care costs. In the past 2 1/2 years, the median price for single-family homes has jumped 20 percent to $636,390, according to Economy.com.

Dick Hoell, director of global workforce planning for Sun Microsystems, says the company recently has focused on local candidates when hiring people for its Santa Clara headquarters. And some companies might pass up a first-choice candidate who lives outside a high-price region to avoid the costs associated with a move. That has had an impact even on high earners in executive positions.

Some firms, though, have begun to think once again about importing managerial talent from outside the state, says Ross Blanchard, managing director for executive search firm Boyden in San Francisco.

Blanchard says that in such cases, those likely to feel the housing pinch are middle managers earning around $100,000. That’s the income level where buyers often seek a “starter” home, like a condominium. In Silicon Valley, such housing is in short supply.

“We advocate a certain housing product type: condominiums, townhomes and apartments,” says Shiloh Ballard, director of housing and community development for the Silicon Valley Leadership Group. But rampant lawsuits over alleged defects brought by homeowners caused developers and insurers to stop building these dwellings, and the supply has dwindled. Though the state Legislature enacted reform, Ballard says the demand for affordable housing continues to outstrip supply.

Other regions of the country are building differently, often with the workforce in mind. In Atlanta, for example, builders over the past five years have fueled that city’s growth with designs that combine thousands of apartments and condominiums with spaces for offices, businesses and entertainment. But Atlanta, which is home to dozens of Fortune 500 companies, telecommunications firms and biotechnology interests, has the advantage of being able to redevelop its urban areas, and leads the country in housing starts. That helps attract as many as 50,000 new residents a year.

“People are moving here because there are opportunities,” says Hans Gant, senior vice president of economic development for the city’s Chamber of Commerce. The price of real estate may prove equally attractive. In the same 30-month period cited by Economy.com, the median home price there rose by a relatively modest nine percent, to $160,260.

To ease the financial burden that buying a house can bring, Silicon Valley companies created a housing trust five years ago. With an initial endowment of $20 million donated by companies, it doles out loans at little or no interest for things like closing costs. And Boyden’s Ross Blanchard says that mortgage assistance is often part of a relocation package. That presumes, of course, that an out-of-towner can get a job offer in the first place.

—Jonathan Pont