Having dropped to 4.8 percent in December, its first time below 5 percent since early 2008, the unemployment rate in San Francisco ticked back up to 5.3 percent in January.
The up-tick in San Francisco’s unemployment rate, however, was driven by a 4,100 person increase in the labor force and the number of employed in the city actually increased by 1,400 from December to January and is now at its second highest point in history.
With a current labor force of 488,300, the number of employed residents in San Francisco now totals 462,600, an increase of 14,000 people with jobs over the past year and within 2,900 of the 465,500 people employed at December 2000’s dot-com peak when the unemployment rate measured 3 percent.
The unemployment rate in San Francisco topped out at a little over 10 percent in January of 2010 when 54,900 fewer San Francisco residents were employed than today.
The unemployment rates in Marin and San Mateo ticked up to 4.7 percent and 4.9 percent respectively in January while the unadjusted unemployment rate for California jumped from 7.9 to 8.5 percent as 68,100 jobs were lost across the state.
Great job. Hope the tech sector and other economic forces keep booming. Great for the city!
Yea, yeah!
55K new jobs in 4 years — and how many new housing units did we build?
jobs are good for a city. Lets build more housing.
A little bit of apples and oranges with those numbers. A lot of SF employed residents work elsewhere (see, e.g., tech buses). And a lot of residents of other counties work in SF (see, e.g. BART, GG Bridge, and Bay Bridge). SF housing needs are driven by how many live here (or want to), not how many work here.
[Editor’s Note: As reported above, these numbers represent the number of San Francisco residents who are employed, regardless of where they work, and exclude residents of other areas who work in San Francisco in the “San Francisco” count.
This isn’t a count of jobs in the city which would exclude those on the buses and include those who commute in.
And we’d argue, these are the numbers to watch with respect to housing demand.]
the peninsula and Marin are doing much better too, so if some of those live in SF as well, same conclusion. we need more housing. preferably all market rate.
[Editor’s Note: See the note above.]
anon,
Here are some good rules of thumb to sort the fruits of the stats:
– 20-25% of SF residents with a job commute out of SF to their place of work
– 45% of the jobs in SF are done by commuters from outside the city
– for every SF resident with a job there are 1.4-1.5 jobs in SF itself
These ratios are about the same as 25 years ago.
FWIW, more SFers commute to San Mateo County than to the entire east bay and the SF commute to the east bay is about the same as the Marin commute to SF.
Thanks Jake.
For the tech industry my gut is that the opposite is true i.e. more life in SF and commute out than commute in to SF from elsewhere.
But does anyone have a more solidly based opinion, or better, statistics for this…?
twitter lockup expires on May 6th
475M shares can be sold by insiders.
will be interesting to see impact on Summer Market
Intel and Cisco both peaked well north of $500B during the last boom only to be worth just north of $100B now. Add to that Siebel Systems and Sun Microsystems, which were acquired for pennies on the dollar by Oracle, and you are talking a trillion dollars in loss of shareholder value for just four companies, regardless of whether those shareholders were employees with stock options grants and stock plans, or outside shareholders.
In contrast, Facebook, Twitter, and let’s throw in Zygna for good measure, have a combined market cap that is about 20 percent of the value that was shed just by the four companies mentioned above.
^The pre-IPO process has changed so much now compared to then, though. Not necessarily in good ways, but in ways that are advantageous to SF Bay Area real estate. Much more of Facebook’s value was “cashed out” to local investors and employees at its IPO than to companies like Cisco and Intel, which went public at VERY low valuations, thus netting most of the gain (and loss) to investors spread all over the globe.
Even if Zynga eventually goes bankrupt (likely?), billions of dollars has been extracted from the rest of the world and deposited into Bay Area hands over the past few years. That won’t change with the eventual bankruptcy, and it will be mostly out-of-area folks hurt.
^ I think you fail to understand that Silicon Valley riches have always been part of the Bay Area including driving real estate prices. Nothing new about Facebook or Twitter. Have you considered how much a typical stock option grant to a mid-level Sun Microsystems engineer in 1995 would be worth five years later? I would say $10M would be in the ballpark and that just for a single options grant.
The idea that somehow, Facebook and Twitter would provide unprecedented amounts of cash flowing into Bay Area real estate is just naive. That has been the case since forever, nothing new. Larry Ellison’s original admin, Jenny, retired from Oracle in the 1990s without being particularly old and bought a place in Pacific Heights. Silicon Valley wealth has been flowing into SF real estate since forever and affected prices accordingly. Anyone getting too enamored with the likes of Facebook and Tweeter may not have the right historical background knowledge about Silicon Valley.
im not enamored by twitter or FB by any means, but the lockup period expiration brings 1600 new millionaires employed at a company within the city. the inventory is so low right now that this should have some impact on the summer market.
funny you picked those 4 against those 3. you could easily have added apple or google to the last group and it would be bigger than the former.
as other have mentioned here too, there were 8 new bay are biotech companies that went IPO last year and 4 already this year. those are making many millionaires as well.
all that IPO cash is local
@anonanon – the difference is that for FB and Twitter, the payoff is immediate at the end of the lockup. For Sun, you had to wait several years to mint that amount, during which time many folks sold for much less. FB and Twitter IPO’d at much higher value (and later in their development cycles) than Sun. That has a drastic effect on the amount that stays local.
I can say this as someone who had someone who worked at Cisco during the 90s and at Facebook until last year. The amount that could be made easily (ie not waiting) is not even comparable.
jill,
Did you ever bother to look up Google’s market cap? About $408B. Less than the amount the market cap that Cisco has fallen from its peak.
I remember talking to a Cisco engineer back in the 1990s. He said he would be able to remodel his kitchen every 6 months just based on the appreciation of the stock in his employee stock purchase program, i.e., not counting stock options.
Basically, big money getting from Silicon Valley riches and into SF real estate and being of part of the SF real estate valuation equation is nothing new. It has being going on forever. If you get your “knickers in a twist” about Facebook or Twitter, it just shows you don’t know much about the history of Silicon Valley.
@anon,
Cisco’s split-adjusted stock price went from around $2 in 1995 to in the 60s in 2000. That means that employees just participating in a stock purchase plans would make a nice amount. And anyone with the standard amount of Silicon Valley stock options would make out like a bandit at Cisco. And Cisco, Oracle, and Sun Micro all went public in the 80s.
We are talking about mid-level people making possibly around $10M based on a single options grant during the heydays of Silicon Valley’s past. And a lot of it would certainly go into SF real estate. Whether they would have to stick around for one or five years with their company is pretty irrelevant. The point is that Silicon Valley’s success has been helping SF real estate prices since forever. Nothing new about that.
No one is saying that it’s new, just that the percentage of the gain staying in the Bay Area is exponentially higher.
Sure, folks at Cisco made money. But as you mention, ANYONE in the world could have made money on Cisco in the 90s, with the vast majority of stockholders at that point from places other than here.
Facebook, on the other hand, went public with a valuation of $104 billion. At that time, more than three quarters of the company was owned by Bay Area folks. I doubt that even 10% of Cisco was owned by Bay Area locals in late 90s, meaning that Facebook’s Bay Area-owned value was significantly higher than Cisco’s ever reached.
Sorry i didn’t realize goog only 400B. There’s also AAPL. I am part of a biotech ipo in the past year and am netting about 140k/ month for the next 4 years. I’m not in top 15 in my company. Upper middle or lower exec level. It’s not just tech. Bay Area instant IPO money going to local people higher in 2013 and 2014 than ever.
On top of Bay Area biotech iPos, takes a look at GILD, ONYX, and BMRN stock over last 2-3 yrs
The thing with companies like Cisco, Intel, Oracle, and Sun in the 90s was that they were already established, publicly trading companies, not recent IPOs. They had lots and lots of employees and most of the engineers, typically based in the Bay Area, would get stock option grants every year fueling the local economy and real estate market. I used to know a guy who worked for Oracle for a few years in the 90s but left in order to spend a year sailing around the world. His newly acquired yacht was named “Thanks Larry”.
And the thing with Facebook is that it was already an established company by the time it filed for an IPO. Meaning that it was a nearly straight cash out to nearly all Bay Area folks at a very high valuation. Not similar at ALL to any of the 90s names.
“And the thing with Facebook is that it was already an established company by the time it filed for an IPO. Meaning that it was a nearly straight cash out to nearly all”
Not true at all. An IPO is just when a company transitions from private to public. When private, a company still has a valuation and a stock price which dictates option strike price. And most recently founders and some employees have been able to cash out on private markets even before an IPO.
What matters is how many employees a company added at what point on the valuation curve, not when the IPO occurs.
Also, options aren’t delived to an employee right away, but vest over time. Many of these recent companies, FB, Zynga, Twitter, started with a very small number of employees and then bulked up headcount shortly before the IPO. Even after the lockup expires, only vested options can be sold. You can be a paper millionaire and then end up doing much better or much worse when the time comes when you can actually sell.
According to the historical stock price feature of Yahoo Finance, the split-adjusted stock price for ORCL was $0.13 on Oct 1, 1990, about three years after the IPO. On Mar 1, 2000, it was $38.94. Now in the 90s, the nominal stock price of ORCL would typically be around $40 and mid-level engineers would get annual option grants of maybe 5000 to 10000 shares. Do some math, and you will realize how much local engineers may have made from the run-up.
Incidentally, the Mar 1, 2000 stock price for ORCL is not too far off from where it is today, meaning that in 14 years, investors, whether employees or not, would have little to show for holding the stock other than some dividends that may not have held up with inflation. And Oracle is doing a lot better than Cisco or Intel, companies that are down a lot more from their peak valuation.
When a company like Cisco sheds well over $400B of its market cap, it has an impact on the employees with stock options and who may be participants in the company’s employee stock purchase program. That may affect their ability to buy real estate. Google’s entire market cap is not enough to make up for Cisco going from $555B to $112B. High-tech companies come and go, and people who go gaga about the impact of the likes of Facebook and Twitter on local real estate need to realize that the best case scenario is that they pick up the slack that some of the previous players left off, which, of course, is better than nothing.
It’s not about going gaga or what have you. It’s simply the reality of a paradigm shift regarding living in SF, tech companies actually being headquartered in SF, a small amount of properties for sale thanks to the state if lending lending — not allowing folks to lever up. When was the last time you attempted to purchase something, anonandon? History can guide us. But this time around not that many people are cashing out. They don’t even have to if they eant to move! They can rent out their places for big bucks while living elsewhere. So even if you completely disagree that twitter is about to have a historical-type effect, you should understand that it doesn’t need to. A couple hundred buyers with 1 to 5m cash can probably effect SF for the better part of a year.
anonanon,
Yes I agree that the volume of wealth can be compared to the dot-com years. But the comparison should stop there. Some companies are creating incredible value and collecting incredible revenue, like Apple. They employ more and more people, are paying very decent salaries and have been doing so for a long time. Our cycle has been going on for almost 10 years now if you count the GOOG IPO as the starting point of the current cycle.
Another big difference: A lot of the newly minted wealth in the 1990s was re-invested in the bubble itself, and not as much in RE. People were not as scared of the stock market as today.
For instance I was in 2 dot-coms back in the day. One crashed and one did a decent IPO. None of my colleagues would have ever thought of buying rental investments or even their own homes. They all sunk their proceeds into stock. I was the uncool guy who was buying up rental property. Boring physical property was for the older folks.
Today things are a little different. New money will diversify and a chunk of this diversification is in RE.
Now whether it’s very wise to push prices to the stratosphere is another issue…
“None of my colleagues would have ever thought of buying rental investments or even their own homes.”
That’s what make the current situation look like the early stages of a bubble. There seems to be more and more widespread interest in real estate simply due to the price gains in recent years.
Today’s headline post on Buisness Insider typifies this.
“You No Longer Have To Be A Millionaire To Flip Houses In San Francisco”
http://www.businessinsider.com/how-to-flip-houses-in-san-francisco-2014-3
Basically a starup letting people who can only scrouge up a few $k pool together to do flips. The shoe-shine boys jumping to get in on the action so to speak.
anon2,
That’s very true. When I was in my first RE binge between 1997 and 2002 the reactions were pretty bleh. Then in 2004-2006 everyone was catching up. Most of my friends did smarten up after though, since many bought in 2009-2011 and few are buying into the current craze.
@Truth,
I’ve been around Silicon Valley long enough to understand that there are no rapid paradigm shifts going on. Even in the 1980s, I would hang out with people that would prefer the urban lifestyle of living in SF but work at places in the Valley like Xerox PARC making for a non-optimal commute.
No doubt, there has been an increase in high-tech companies in SF, anything from Salesforce (which actually has been around since the 90s) to Splunk, and Twitter, etc. But to me, that’s evolution, not a paradigm shift.
And the dot-com bubble saw an incredible number of high-tech companies being established in SF, mostly fly-by-night ones.
I recently had a job interview with one of the hottest companies in one of the hottest high-tech space areas. It was in San Jose. It was on a bad traffic day and the drive back to SF took me two hours and I called the headhunter the next day to say that the commute would be a deal killer. The guy who was running the place was extremely nice and freely admitted that being in San Jose was a challenge. Being mid-Peninsula would make it much easier to attract workers from both SF and further south. He suggested that if I joined, they would open a San Francisco office since they already had a couple other SF employees. It was flattering, but there are issues with working out of a branch office as opposed to HQ and I told them that I was not interested.
Well to be honest I feel as if we’re not saying things that are that different. You used the word rapid. I didn’t say that. But you said evolution, and I’d agree with that. What’s rapid? Are five, six years rapid? Because I’d argue that a lit if these things started happening during the bubble of two years ago, continued during the downturn, and are playing out in today’s RE cycle. We agree that generally there are more tech jobs. I’d say that even 50 semi-big to big cash-outs can roil the paltry state of SF r.e. for an entire quarter or more. And yes, Twitter is yet to come. It’s simply put, a lot of cash in a strangely small marketplace.
That was, the bubble of two RE cycles ago? Dunno how that typo happened. Apple cannot read my thoughts very well.
Someone once told me time is a flat circle. Everything we’ve ever done or will do, we’re gonna do over and over and over again.
I know several people that have bought near me around South Park in the last few years with money from tech stock.
And there’s a lot of money flowing in. Most of the recent job growth in San Francisco is investor financed, not from reinvested company profits.
From a recent WSJ article:
“Venture capital investment in San Francisco versus Silicon Valley has been steadily increasing during the last decade, with the number of San Francisco deals rising to 74% of the Silicon Valley total last year, according to Dow Jones VentureSource….
There were 423 financings last year raised by San Francisco-based venture-backed companies, compared to 61 in 2003.
Those San Francisco financings last year totalled $4.58 billion, which was 65% as much as the $7.04 billion raised by Silicon Valley companies.
In 2003, San Francisco companies raised just $339 million compared with $5.1 billion raised in Silicon Valley, which VentureSource defined as Santa Clara and San Mateo Counties.”
http://blogs.wsj.com/venturecapital/2014/02/27/as-bay-area-investment-shifts-north-institutional-venture-partners-opens-san-francisco-office/
SF has about half as many jobs as the valley, so SF has been getting more financing $/worker. But $4.58B is still far below any year in the 1996-2000 bubble. It seems investors have much better discipline and are getting better value to risk ratios.
Twitter has never made a profit, has lost a billion dollars, and their ad rates continue to decline. Here’s hoping they figure out how to turn a profit before they burn through another billion or two and suffer a stock stumble.
And we are right around the two-year anniversary of the great zynga sell-off when they went from a market cap of $12B to $2B in less than a year.
I wonder how that affected our realestate market.
Why bring up Zynga? Do you mean how it would have affected the market? Because the effects, as it turned out, were practically nil. There are many, many smaller companies that have been acquired, or piggyback on other technologies, or are perceived as rivals to more monied companies, that have been and will be acquired since Zynga did what it did. Companies that were never going to make the news made three or four people millions, in SF, monthly, let’s say, for years now. This is what’s happening. Why posters come on here and talk about Zynga and what happened 20 years ago is puzzling. I can only surmise that they are nowhere near the marketplace. It’s very simple: tons of cash, low inventory.
Why bring up Twitter then?
It’s very dishonest to hype up the winners and try and sweep the losers under the rug.
Who brought up Twitter? jill @ 6:11 March 9? If you read my comments I am not, largely, speaking about Twitter. Your comment seems purely mischievous at this stage. Feel free to say something real or else know that I won’t acknowledge another “anon” in this thread.
But if you’d like to continue, twitter v zynga as winners v losers? Really? No, sorry. Too silly. Twitter may wind up being a loser in the end, sure. But it’s still valued at somewhere in the 20-30b range vs Zynga’s wanted 7 and down to ultimate 1B. And it is gaining cultural currency, not losing it. Be fair if you’re going to call someone out for being “dishonest.”
Truth, I completely agree with you “Companies that were never going to make the news made three or four people millions, in SF, monthly, let’s say, for years now.” Same thing was true in 1999, not to say that this is just like then cause there are differences, as I mentioned above and have mentioned on other threads.
As to “Why posters come on here and talk about Zynga and what happened 20 years ago is puzzling”, here’s what Paragon Real Estate (i’m not affiliated) says:
“Surprisingly consistent: Over the past 30+ years, the period between a recovery beginning and a bubble popping has run approximately 6 years. We are currently about 2 years into the current recovery. Periods of market recession/doldrums following the popping of a bubble have typically lasted about 4 to 5 years.”
They have more detailed breakdown of the SF home sales in 2013 per MLS estimates (paragon collected data at namelink), including total of $6 billion on 5400 sales at a $1.1 million average sales price.
I’ve got great hopes that the bulk of the newest generation of tech companies will go cash positive and no longer pay their rent with investor money, making the same “paradigm shift” as Dobly Labs, ILM, Salesforce, Craigslist, etc.
“Same thing was true in 1999”
Exactly, and home prices were very different back then.
Inventory is a key factor now, and although people here try and make every story about SF it’s important to realize that inventory is very low on a national level.
A few millionairs may be the driving factor behind the NV/GP/BH $2M+ market, but that is a very small fraction of the Bay Area housing market.
I agree that inventory is a significant factor but it isn’t a few millionaires, it’s tons, and it isn’t just in the southern parts of town.
Inventory is definitely tight now. It was tight in 1999 too. In the few years just before the dotcom boom not much was built in SF.
In 2013 SF, $2M+ housing accounted for 8% of units sold, about 450 units. No doubt that within that segment the newly minted have a big influence.
To put current prices in perspective, the Case-Shiller Index for the 5-County San Francisco Metro Area shows a 38% increase from the dotcom RE peak in 2001 to now. The CPI is 32% over the same time and bay area income gains have tracked the CPI fairly well. So, prices are little higher now, but not much.
The lower interest rates now as compared with 7-9% in 1998-2001 should be helping with affordability for the roughly 75% of buyers that do not pay cash.