According to recent reports the outlandish rent prices in San Francisco may finally be plateauing. Well, unless you’re the guy who just had his rent increase from $1,800 a month to $8,000!
A ceiling on rent increases is good news for the broader swath of the Bay Area, as well as technology workers. As we reported last year, the skyrocketing rental prices in San Francisco were beginning to even price out technology workers with salaries well into the six figures. In fact, some of these workers joined 11 million Americans in spending more than half of their income on rent!
With rent payday coming up at the end of the week, we decided to revisit the data with help from our friends at Anthology.
First RadPad looked again at the current one-bedroom median rental price within a .5 mile radius of technology conglomerates such as Google and Salesforce, along with unicorns like Uber and Slack. Then Anthology supplied us with the median salary for the 1,000 most recent mid-to-senior level software engineers on its platform from these companies. From there we could calculate what percentage of technology workers’ take home pay (after taxes) will be spent on rent now versus last year. It’s worth noting that that California has some of the highest tax rates for high income earners.
Fortunately for software engineers, their profession has some of the fastest growing annual salaries year-over-year. This year is no different, with forecasts for salary increases ranging between 3-6%. For the ten technology companies that we looked at in San Francisco, the salary increase for mid-to-senior level engineers was closer to 7%. With rent costs for workers living nearby their companies increasing at just around 6% since last we checked – many folks are spending less of their income on rent this year versus last year.
That 6% number is of special interest, given rent on average in San Francisco has gone up 6.6% on average each year for the last 70 years! Over the last few years as rent has skyrocketed, it has been more like 10%. Falling below those averages means technology workers at four of the the ten companies we looked at are paying less of their take home pay on rent now versus last year. Workers at five of the companies are spending more, while employees at one company are spending about the same.
Of course, pocketing any extra money puts these fortunate workers in the minority of renters. One third of renter households earn less than $25,000, while only 10% of renter households earn over $100,000.
Who is making out the best in the wallet after paying rent?
That would be mid-to-senior level software engineers at Twitter and Uber, who are spending 41% and 43% of their income on rent after taxes. Unfortunately, that is still well above the rule of thumb that you should be spending less than 30% of your take home pay on living costs.
So how are workers at these companies getting closer to that threshold this year? It helps that both companies are paying in the top three of wages for the companies we looked at. Uber software engineers reported the second biggest jump in wages – up nearly 20% to $155,000. In addition, both of these companies also find themselves on the lower end of monthly rent payments for employees to live nearby work.
Uber is located in 1455 Market St., which also is home to Square. Asking prices for one bedroom apartments nearby are currently at $3,421. That is actually below the citywide San Francisco 1-BR median, which currently hovers close to $3,500. Interestingly enough, it’s also less than what potential employees of Uber can expect to pay to live nearby the company’s new Stanford research outpost ($3,595/Month). Apartment finding in the Palo Alto area is pretty brutal as well!
Twitter on the other hand, which is located a block away from Uber’s Market St. location, is a bit cheaper for employees within a .5 mile radius of its office ($3,330/Month).
Those that are paying more to live near work?
Google’s downtown San Francisco office tops the list ($3,800/Month) after being the #2 most expensive office to live nearby in 2015. No wonder Sergey Brin says now is NOT the time to come to Silicon Valley to start a company and one of Google’s software engineers is living in a van!
Google surpassed Zynga, which fell into being the second most expensive office to live nearby ($3,760/Month). Employees there may be looking at a rent decrease or possibly a longer commute as the company’s Design District office is actually up for sale for a cool $228M!
Salesforce ($3,740/Month), Stripe ($3,696/Month) and Jawbone ($3,482Month) round out the top five most expensive offices to live nearby in San Francisco for technology workers.
Those that are taking the least amount of salary home after rent?
While Google’s median salary for mid-to-senior level engineers of $170,000 covers the high rental prices to live nearby its downtown office (workers spending 44% of post-tax salaries on rent), Zynga and Stripe wages appear to fall a bit short. Reported wages at Zynga actually went down from last year ($130K), meaning employees are spending 56% of their take home income on rent to live nearby. Stripe employees aren’t doing much better, spending 55% of their $129,000 in salary to to live nearby the company’s office within the Pioneer Building in the Mission District.
Software engineers working at Airbnb and trying to stay nearby the company’s headquarters in SoMa (without using an Airbnb), also made the list of workers spending more than 50% of income on rent (51%).
Time to head south to Silicon Beach?
Last year we noted that technology workers looking for savings may want to consider heading south to Silicon Beach. The thought still applies. In fact, the median one bedroom rent nearby our office and Snapchat’s actually went down since we looked at last year. You can’t say that about any of the areas we looked at nearby technology offices in San Francisco.
In addition, Hawthorne-based SpaceX continues to supply the best living value of any of the technology companies we looked at. Although it’s paying the lowest salary on our list, the $995 rental price nearby its office means SpaceX employees have the largest percentage of take home income in their pockets after paying rent each month. So if you’re considering shuffling south, sacrificing discernible weather and decent public transportation for the endless sunshine and perpetual traffic of Los Angeles, we say, do it!