The Link Between Housing Affordability and Wage Growth

The San Francisco Bay area is one of the priciest housing markets in the country. Despite a 39% increase in inventory and an ongoing increase in affordability within the San Francisco Bay area, many homeowners and potential homeowners are still finding the area unaffordable.

In this Video Spotlight, Joe Lonsdale, Founding Partner of 8VC, talks with CNBC’s "Squawk Box" about what needs to be done to address the Bay area's affordability crisis.

“Generally, wealth creation is extremely positive, but it's increasing the demand for homes, and we’re not increasing the supply,” Lonsdale said.

Lonsdale notes that, currently, 40% of the Bay area is designated for grazing cattle, cutting down on potential room for housing. Lonsdale suggests that making use of this land, and thus bringing down housing costs in the San Francisco Bay area, could potentially increase wages across the U.S.

“You’re starting to see 10,000 people per year leave because of the housing costs, and you’re starting to see all of our companies are not able to hire,” he said.

“If we were able to bring down the average cost of housing in San Francisco to the national level, wages around the country would go up by $2,000 per person,” Lonsdale claims. He argues that, with housing costs lowered in San Francisco, talent would be pulled back into the Bay area and Silicon Valley, creating a ripple effect that would boost competition and wage growth elsewhere the country.

See what he has to say below.