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Silicon Valley Last in Survey on Conditions

The region is burdened by high housing costs, congestion and more. But capital is plentiful.

September 02, 2006|From the Associated Press

SAN FRANCISCO — Silicon Valley ranks last in an annual ranking of 12 U.S. technology hubs because of the region's notoriously high housing costs, traffic congestion, unemployment rate and other quality-of-life problems.

According to a survey by the Silicon Valley Leadership Group, the nation's top-ranked tech hub is North Carolina's Raleigh-Durham area, which enjoys relatively affordable housing and a thriving job market. The region also wins points for local children's performance on eighth-grade math tests as well as low sales taxes and utility bills.

The No. 2 city is Seattle, home to thousands of well-paid technology professionals who work at Microsoft Corp. in suburban Redmond, Wash.

No. 3 was the greater Denver area, which despite increasing traffic jams and soaring housing prices is home to many start-ups in the emerging alternative-energy niche.

The San Jose-based Silicon Valley Leadership Group ranked its home region last for the second straight year, a dubious distinction considering that last year's list didn't include expensive cities such as New York or those with struggling urban cores such as Philadelphia and Chicago. They all finished higher than Silicon Valley this year.

"These results were a reality check on the challenges we all know we face here in the valley," said Carl Guardino, president and chief executive of the group, which represents more than 200 private-sector employers. "There are seemingly intractable challenges we know won't change over a week or a year."

The valley -- defined broadly as the region stretching from San Jose north to San Francisco and Berkeley as well as suburbs such as Cupertino and Palo Alto -- fared particularly poorly because of its expensive homes.

Only 14.9% of local homes are within the price range of individuals earning the median income, according to a home builders survey included in the group's study. Only New York and San Diego fared worse.

By contrast, 65.8% of homes in the North Carolina tech hub are within the reach of those earning the median income.

Despite its dismal showing, Silicon Valley remained dominant in one key metric: It attracts nearly $8 billion annually in venture funding, four times as much as its closest domestic rivals. That includes $1.6 billion for "clean technology" and alternative-energy companies.

Silicon Valley also is one of the world's few tech hubs that dominate both the technology and life-sciences industries, putting it above international centers such as Basel, Switzerland; Bangalore, India; Prague, Czech Republic; Dublin, Ireland; Berlin; Tokyo and Shanghai.

The report does not attempt to calculate the effect of weather, cultural attractions or other intangibles that draw many people to California.

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