SAN JOSE, Calif. -- An emerging group of local entrepreneurs is taking up arms against the sky-high cost of living in the Bay Area, hoping to end once and for all the housing crisis crippling the region.
These founders, intent on disrupting the housing market and bringing down costs, are stepping in as government officials and nonprofits struggle with the enormity of the problem. Some are launching startups focused on creating new housing units, while others are working to help people buy or rent.
It's a potentially lucrative business opportunity, targeting a sector where experts agree change is sorely needed. In some places in the Bay Area, only one-quarter of potential first-time buyers can afford a median-priced home, according to Joint Venture Silicon Valley, which studies the area's economy. It's no better for renters: The median cost for an apartment is more than twice as high in San Francisco as in the rest of the country.
"It's really exciting to the see the marketplace responding to the need," said Rufus Jeffris, vice president of communications for the Bay Area Council.
It's exciting for investors, too, who are touting real estate tech as Silicon Valley's next hot trend. The past few years have seen an increase in housing-related startups, as founders rush to take advantage of a prime opportunity, said Tom Cole, managing partner of Palo Alto-based Hone Capital, which has funded at least five real estate tech startups since 2015.
"Real estate is an example of the type of thing that Hone Capital loves to find," he said, "which is a huge, huge, huge industry that is rife with inefficiencies."
San Francisco-based startup Landed, founded by two Stanford Business School alumni, is raising money to help teachers afford down payments on homes in their school districts. Starcity is creating new housing by buying and renovating abandoned buildings and converting them into long-term rental units. HomeSlice, founded by recent UC Berkeley grads, is building a platform where groups of people can purchase a home together -- making the goal of home ownership more attainable. Oakland-based Roofstock, via an online marketplace, helps landlords buy and sell single-family rental homes without displacing tenants. And Haven Connect is trying to get more people into low-income, affordable housing by streamlining the onerous application process.
"There is a lot of will out there to try to figure this out," said Landed co-founder Alex Lofton. "I think people should feel there's reason to be hopeful as much as there is reason to continue to be alarmed about the issue."
Fewer than 1 percent of homes for sale in San Francisco are affordable for someone making a typical teacher's salary of $72,000, according to a report by real estate website Trulia. That's a major problem to Lofton, who says his company's ultimate goal is to keep local teachers from fleeing the area in search of cheaper housing.
"If they're all pushed out," he said, "there's a question of who's going to teach our kids, and what kind of communities we're going to live in."