International Property

As tech giants move in, rising rents and home prices push minority households out of East Palo Alto

  • Only a small fraction of jobs in California’s big technology companies go to those who live in this city of 30,000 people
  • Latinos and African-Americans are being pushed out to make room for predominantly white technology workers
PUBLISHED : Monday, 05 November, 2018, 8:04pm
UPDATED : Tuesday, 06 November, 2018, 6:36pm

East Palo Alto in California is a poor city surrounded by the temples of the new American economy, which has – in nearly every way imaginable – passed it by.

Just outside the northern city limit, Facebook is expanding the blocks-long headquarters it built seven years ago. Google’s offices sit just outside the southern edge, and just a few miles to the west, Stanford University stands as the rich proving ground of the economy’s future. Amazon just moved in.

US mutual fund Putnam bets struggling malls will transform to survive, pitting it against hedge funds

Only a small fraction of jobs in these companies go to those who live in this city of 30,000 people, one of the region’s few whose population is made up mostly of minorities. And this demography is under threat by the one economic force that has not passed East Palo Alto by – rapidly rising rents and home prices.

“Amazon Google Facebook – SOS”, reads a painted bedsheet draped from an RV parked off Pulgas Avenue, one of dozens of trailers where families have come to live rent-free along a gravel path that leads from the city to the San Francisco Bay.

In the past year, John Mahoni, a burly and affable 41-year-old Latino man, has had a dozen visits from real estate speculators looking to buy his small house off Terra-Villa Street in the city’s worn-down southeast side. The most recent doorstep instant offer: US$900,000 in cash, almost three times what he paid less than a decade ago. He turned it down.

“They’ve stopped coming because I cussed them out, but I know they were just doing their jobs,” said Mahoni, noting that residents have the right to reject any offer for their property. “ … There’s no law against not being greedy.”

Skyrocketing housing costs are accelerating a demographic shift across the progressive Bay Area, pushing out Latinos and African-Americans into ever-more distant suburbs to make room for predominantly white technology workers.

A recent University of California at Berkeley study found the region has “lost thousands of low-income black households” as the result of rising housing costs. The study found no similar effect on the income of or departures in white neighbourhoods.

US housing market looks headed for worst slowdown in years

The process forcing minorities to leave for cheaper cities, caused by Bay Area housing shortages and policies that have cemented these market trends, is in effect resegregating a region that has prided itself on ethnic diversity.

A 30 per cent median rent increase from 2000 to 2015 translated into a 21 per cent decline in minority households, according to the university’s Urban Displacement Project. While it is hard to pin down the average Bay Area rent, estimates place it above US$3,000 a month.

Black neighbourhoods in Oakland, Richmond and Berkeley have seen the most precipitous exodus. Most of those leaving are heading east to the less expensive agricultural valleys, where political resentment towards the coastal elite has been building for years.