A Tale of Two Cities - L.A., San Francisco & The New Economy

We hear so much about the high cost of housing in San Francisco, but L.A. is also a very expensive place to live and becoming more so every day. You find that, even when housing costs are taken into account, people still tend to make out better economically in San Francisco than in L.A. But do you also think that high housing prices will affect the economic growth of either city going forward?

The Bay Area's high housing costs are largely a sign of its success in the sense that they are generated by demand on the part of a high-income labor force that must live in the Bay Area to do its work. But most Bay Area workers have more income after comparing housing costs than people in greater L.A. Going forward, both L.A. and San Francisco are facing high housing demand and a new geography of housing demand. In both areas, people now want to live in key centers. Because many have irregular working hours, there is high traffic congestion and people want to live closer to work. As a result, both regions need to expand housing supply, and they need to do so with more density. To do this, they need to tie the region's centers together with much better public transit.L.A. is in the midst of the country's most ambitious urban rail expansion. Hopefully this will allow the city to make its employment centers denser, which facilitates the kind of interaction that New Economy industries require. But transit and dense housing alone do not generate high-wage, high-skill economic development. It is vital to remember this, because urban planners often fall into the belief that if you change the physical environment, it will automatically change the economic environment. This is a trap both regions must avoid, all while making necessary planning and infrastructure changes.

http://www.citylab.com/housing/2016/04/the-diverging-economies-of-la-and-san-francisco/479685/