Silicon Valley last year shrank at a level not seen since the dot-com bust, the second consecutive year that a record number of residents departed and the fourth straight year of population declines, according to an annual report.
A net total of 47,800 residents moved out of the region from July 2021 through June 2022, just shy of the record number of 48,300 who moved out in 2001 after the tech bust. That’s according to the Silicon Valley Index, an annual look at the health of the region.
“Yes, there’s an exodus,” Russell Hancock, chief executive of Joint Venture Silicon Valley, said in a news briefing Tuesday about his group’s latest report. “It’s happening.”
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Amid reports of an exodus earlier in the COVID-19 pandemic, the Silicon Valley Index did not show a population decline in 2020. With more data, though, there is now a clearer picture of the region’s population declines, especially as they relate to the effects of the pandemic.
The effects of COVID-19 raised death rates in the region, with more than 3,300 Silicon Valley residents’ deaths caused by COVID-19 last year. But it also changed the nature of work, including where that work can be done, which allowed residents to move away from a high-priced region — with the majority staying in California but moving to other places in the Bay Area or more affordable outlying areas.
Despite the population decline, housing in the region continues to be expensive. Median home prices still rose 7% to a record $1.53 million in Santa Clara and San Mateo counties in 2022, making houses there more expensive than in San Francisco for potentially the first time ever, according to the report.
The total population of 2.62 million as of midyear 2022 is now back to 2013 levels. Also contributing to the population decline was fewer people moving to Silicon Valley, especially from foreign countries. In 2021, there was a negative net flow of foreign immigration into the region, according to revised numbers from the state.
That reversed in 2022, with Rachel Massaro, director of research for Joint Venture’s Institute for Regional Studies, saying 8,000 foreign immigrants moved to Silicon Valley last year. That’s slightly lower than the 8,400 foreign immigrants who moved to the area in 2020.
Steve Levy, director and senior economist of the Center for Continuing Study of the California Economy, told MarketWatch that the return of foreign immigration is key.
“The return of international travel and the opening up of China [is] essential,” Levy said, because the region depends on immigration as a source for its skilled workforce.
Silicon Valley’s population declined by 38,900 residents between mid-2020 and mid-2021, a record high, according to the index. And the index also mentioned that the net domestic outmigration of 91,400 from July 2020 through July 2022 approached the number for the prior four years combined — 97,800 — citing recently released data from the California Department of Finance.
What does all this mean for tech, the industry that dominates the region, and its labor force? Some Silicon Valley residents have moved to other growing tech regions in the past couple of years, as Joint Venture’s previous indexes have shown.
“It’s clear that other regions are rising,” Hancock said Tuesday. “But tech is all networked together. Think of Silicon Valley as a major node in a network of nodes.”
Despite recent news about tech layoffs, the index shows that in the past year through June 2022, Silicon Valley added 88,000 jobs, a 5% rate that outpaced the nation’s. More than 16,000 of those jobs added were in the tech industry. Silicon Valley’s unemployment rate is at roughly 2%, better than the national rate of 3.4%.
In terms of the population decline’s effect on the labor force, Massaro said the types of residents leaving the area may be shifting.
“In 2021, most of the outmigrants who left [the Bay Area] were going to other tech centers in nation,” she said. “But in the last year, they were going to Reno and Miami-Fort Lauderdale.” Those areas are well-known as places people go to retire.
See: Silicon Valley’s population shrank in 2021 unlike any time since the dot-com bust, but it wasn’t just because people left