Homeless In Silicon Valley

Family members of accused terrorists arrive to pass through security at a Brampton, Ontario, Canada courthouse on Tuesday, June 6, 2006.
AP Photo/Frank Gunn
In California's Silicon Valley, soaring technology stocks make new millionaires every day, but now even the millionaires are struggling to find a decent place to live.

CBS News Correspondents John Blackstone and Hattie Kauffman report on the housing crunch in the Valley.

In this land of dot-com riches, affordable housing has become a contradiction in terms, and Silicon Valley is a place where many hard-working people can wind up homeless.

When Terri Birdzell finishes her $10-an-hour job at a Silicon Valley computer company, she goes home to a homeless shelter, because even a modest apartment is out of her reach. And she's not alone.

Says homeless advocate Jan Bernstein, "We've never seen this many people working full-time jobs and (who) still can't afford housing."

There are 20,000 people in Silicon Valley who need emergency shelter this year, Bernstein says. Their paychecks just don't cut it.

"For a family of four, $50,000 - which would be great anywhere else - is low income," Bernstein says.

The impact of soaring housing prices now is being felt in neighboring communities as technology workers and corporations overflow from Silicon Valley.

California's Central Coast, stretching about 150 miles from Montara to Monterey, is home to about a dozen communities with a total of about 500,000 residents. Inland and parallel to the coast on the same stretch, more than 2 million people fill the burgeoning cities south of San Francisco.

"The Silicon Valley is probably the most dynamic economic development area in the entire world," says Gary Patton, who heads LandWatch Monterey, a conservation organization. "It's putting incredible pressures on the Central Coast."

Whenever a For Sale sign goes up in the Valley these days, potential buyers start fighting over it, offering well above the asking price.

"You'd be fortunate to find a two-bedroom, one-bath house for $600,000, probably more like ($700,000)," says Liz Kniss, mayor of Palo Alto, Calif.

Twenty years ago, Silicon Valley, once known as Prune Valley, was lush with orchards, fruit-packing plants, clean air and affordable homes.

Schools are now overcrowded, traffic is regularly jammed, housing prices have soared and office buildings and corporate campuses such as those of Cisco, Intel, Apple, IBM and Sun have replaced the rows of peach trees.

On clear days, Silicon Valley residents can still see the redwood-covered Santa Cruz mountains that separate their freeways, office parks and gated communities from the coastal havens of Half Moon Bay, Santa Cruz, Monterey and Carmel.

But now these picturesque towns are growing techie, too. With nicknames like "The Cyber Coast" and "The Silicon Beaches," the coast has become home to dozens of new Internet and technology businesses.

First came the workers, well-paid Silicon Valley computer programmers willing to commute over the moutains along slick, foggy narrow roads to live near the beach. These days about 60,000 people a day commute in two lanes from Santa Cruz along Highway 17 to lucrative jobs in the Silicon Valley.

They boosted the coastal economy with their paychecks, but also drove up housing prices to more than $400,000 on average, and created daily traffic jams along scenic Highway 1, which winds along the cliffs above the Pacific Ocean.

Soon the techies began opening businesses on the coast themselves.

The growth has been rapid. These days the Monterey Bay is not only home to a biologically diverse national marine sanctuary and dozens of state parks, but also to about 20 Internet startups, including the pre-IPO firms SurfSoft in Capitola and Lutris Technologies.

Local leaders concede that some damage has already been done. Housing prices in Santa Cruz and Monterey are among the nation's top, and Highway 17 routinely makes the top 10 lists of most dangerous and overcrowded highways.

Some residents are fighting back. In Santa Cruz County, residents and local political leaders routinely kill proposals to widen highways that would make the region easier to drive in and out of.

And when one high-tech leader submitted plans for a mansion on a scenic coastal drive in the city of Santa Cruz, hundreds of residents turned out to protest.

In Silicon Valley itself, the competition for housing is fierce.

"Nobody bids asking. You bid at least $100,000 over, and it just goes up from there," says Erika Papakipos. She and her husband Matt have been outbid on several houses even though, thanks to stock options in the computer company where Matt works, they have $2 million to spend.

"A lot of people have so much money to burn that $5 million for a house is, like you know, I've got another ($25 million) where that came from," says Erika Papakipos.

Palo Alto's mayor worries about how the soaring property prices are changing her community, "You begin to see that digital divide and now what I call a housing divide become much deeper," she says.

In this valley that's produced an embarrassment of riches lately there are some beginning to wonder whether all the prosperity is worth the price.

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