San Francisco is home to both the highest rents in the country and the most venture capital investors in the country, drawing in 32 percent of all venture capital dollars spent in 2014. There's plenty of speculation about the links between the city's booming tech scene and soaring rents, but is the connection actually as strong as we think it is? Rental website Zumper dove into the question and found that for every $1 billion in venture capital invested into a local economy, one-bedroom rents will go up $69 per month and two-bedroom rents will go up $99 per month. That means that San Francisco rents owe 33 percent, or $1,069 of their current median price, to venture capital investment.
So what did the Zumper report take into account to come up with this figure? It considered population, median household income, housing vacancy rates, unemployment rates, rent control, and median home values. Of course, there are some other intangibles that contribute to the price of living in a city—San Francisco's climate and natural beauty, for example, are preferable to those in most other big American cities. And, as TechCrunch's Kim Mai-Cutler pointed out, Zumper did not account for zoning regulations that make it hard to build in San Francisco.
It may be hard to put an exact figure on the impact of venture capital money on rent prices, but there is undoubtedly a connection there. San Francisco is a boom town, and that's going to make it a pricey place to live, at least while the boom keeps going.
· Are Venture Capitalists Raising Your Rent? [Zumper]
&*#183; Zumper: One-Third of San Francisco's Rent is Attributable to VC Funding [TechCrunch]