As the price of real estate in Silicon Valley continues to climb alongside the fortunes of its local entrepreneurs, some have wondered how those prices compare to those from the California Gold Rush that began over 150 years ago. While real estate prices paid during the gold rush period are astronomical compared even to today, some San Francisco residents are already beginning to look elsewhere for a new place to call home.
In 1849 writer Bayard Taylor corresponded with the New York Tribune regarding what he saw upon arriving in San Francisco, where hotel rooms went for up to $300,000 a month in today’s dollars. Property owners who went bankrupt looking for gold still managed to come out ahead in some cases, based only on their real estate’s appreciation in value.
Prices today for groceries in San Francisco may be higher than the national average, but author Edward Buffum’s 1850 account of a normal breakfast for two during gold rush years totaled up to $1,200. One pound of coffee for $1,200, boots for $3,000 and newspapers for $28 were all commonplace.
Many of today’s most well-known businesses actually started by providing services to local miners at these inflated prices. Blue jeans from Levi Strauss and banking by Henry Wells and William Fargo are but two examples.
The California Gold Rush eventually ended, and there are signs that the Silicon Valley real estate boom is seeing its own end. According to the CEO of real estate firm Redfin, Glenn Kelman, 1 in 7 residents living in the San Francisco Bay Area were using the site to search for homes outside the Bay Area in 2011. The number has nearly doubled since then, to 1 in 4 residents, with many looking at housing in Seattle, Portland and Boston.
The number of Bay Area transplants has even started to raise the ire of locals in their respective real estate markets, who can’t compete with bids that are commonly 20% above the asking price. The trend will continue with the average price of Silicon Valley real estate exceeded $1 million, more than double that of Seattle, Portland and Boston.
As the talent pool moves away from higher rents, many hope that they will bring the success associated with their previous home town.