May 24, 2019
San Francisco has unseated Zurich from its long-held top ranking for both wages and disposable income in the latest Deutsche Bank survey of prices and living standards. The Swiss capital does rank at the top for overall quality of life, though, based on a composite of several indices—and that’s a measure by which some would say San Francisco has lots of catching up to do.
In terms of wages and disposable income, respectively, “San Fran has climbed a stunning seven and 21 places on these two measures over the last five years,” according to Deutsche Bank’s report on its findings. “It’s also climbed seven places to number 9 over both the last one and five years in our quality of life index.”
Deutsche Bank says San Francisco’s rise to prominence shows that the rapid growth of the U.S. tech sector is helping this city beat traditional capital cities—including London, Tokyo and Paris—for incomes. The city has also come out on top of JLL’s new global ranking of innovation hubs in terms of investment capital, thanks to its leadership in innovation and its strong talent pool.
Although San Francisco’s cost of living is “increasing each year and rising up the cost rankings on most measures we cover, it still lags major global capitals,” according to the Deutsche Bank report.
In terms of two-bedroom apartment rents, though, San Francisco is second only to Hong Kong, and the difference between the two cities in average monthly rents is just $54. At an average of $3,631 per month, San Francisco rents are 25% higher than what New Yorkers would pay for the same accommodations.
Further, Compass Bay Area market analyst Patrick Carlisle notes that San Francisco’s latest high-tech/biotech/fintech boom, coupled with the “staggering leaps in innovation it has created,” has resulted in “an unparalleled amount of new wealth in the region in a very short time, but it has also created enormous social and economic stresses.”
He cites the “huge ramifications” of housing affordability from a social, political and economic standpoint, “as residents, businesses and workers consider locating elsewhere. Income inequality adds further stress. The boom has lifted many boats financially, but many residents have not participated in the financial upside, only the financial downside of substantial, sometimes unaffordable increases in the cost of living.”
Added to which, Carlisle says, “the tremendous growth in Bay Area population has affected quality of life issues, such as infrastructure and commuting. Still undoubtedly a great city, but struggling with sizable problems without easy solutions.”
The five-year climb of San Francisco is also a U.S. and U.S. dollar story, says Deutsche Bank. After San Francisco and Zurich, “New York, Boston and Chicago fill out the rest of the top 5 in terms of salaries and disposable incomes,” the report states. All three cities have entered the top five recently as the U.S. economy and U.S. dollar power ahead.
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