Iris Milano could hardly sleep after she got the news that her family would be kicked out of their two-bedroom apartment in San Jose.

“You’re always thinking and worrying. It’s something that is always with me,” said Milano, 47, a skin-care technician who lives with her husband and 14-year-old son in an apartment protected by rent control in the northern California city. “We are being forced to move. This is our home.”

Milano, who is originally from Venezuela and has lived in the area for 13 years, is one of roughly 670 tenants who are being displaced from their homes in what local housing advocates believe to be Silicon Valley’s largest-ever mass eviction of rent-controlled tenants.

The 216-unit complex called the Reserve Apartments that is being demolished to make way for a development of market-rate housing – located five miles away from Apple’s headquarters, 14 miles away from Google and 20 miles away from Facebook – is the latest example of rising income inequality in a region home to many of the world’s wealthiest technology companies.

Iris Milano. Photograph: Sam Levin/The Guardian

Residents of the Reserve recently learned they would all have to move out by April of next year so that developers could move forward with construction of new housing that many of them will not be able to afford.

All of the modest apartments at Reserve are protected by rent control laws, which means the landlord is barred from increasing rents beyond 5% each year.

As a result, the complex is home to a diverse mix of working-class residents, low-income tenants as well as some newer, wealthier renters, including tech workers. For the longtime residents already struggling to make ends meet, it’s clear that they will face an uphill battle in their search for comparable housing in the surrounding area – and that they will be entirely priced out of the new building replacing their home.

“My family is all here,” said Kira Nelson, a 32-year-old stay-at-home mother, who said she is considering moving to Sacramento, 120 miles north, where she can afford the same level of housing.

“I don’t resent the millionaires ... but all the locals are moving out,” she said.

After living at the Reserve for seven years, Nelson’s family pays $2,000 a month for a two-bedroom. Equivalent housing nearby appears to cost $1,500 more than that, she said, which means she would have to go back to work if they want to stay in the area.

“I’d prefer to raise my children,” she said as her two young kids rode bikes in circles outside her door.

The Reserve evictions are part of a much broader trend of northern California communities becoming unaffordable to middle-class people in the face of rapid gentrification and a booming tech economy.

Reserve Apartment Homes: located five miles from Apple headquarters, and 20 miles from Facebook. Photograph: Sam Levin/The Guardian

Between 2000 and 2013, the number of low-income households in the Bay Area increased by 10%, but the region lost 50% of units defined affordable for this population, according to researchers at the University of Berkeley, California, who have closely studied gentrification and displacement.

Studies have also repeatedly shown that Silicon Valley tech firms are exacerbating inequality and that many local workers do not make enough to support a family.

The region that has one of the highest rates of homelessness in the country.

Amid this intensifying housing crisis, mobile home parks, large homeless encampments and other complexes that house vulnerable residents have faced increasing threats of closure and eviction.

Projects like the one replacing the Reserve apartments are designed to help address the housing shortage by building denser apartment buildings in an area where demand is so high.

The developer, Greystar Real Estate Partners, intends to build 640 new apartments on site, along with 8,000 square feet of commercial space. “We believe for the long term, the best way of bringing rents down is to increase supply,” said Dan Orloff, spokesman for Greystar.

None of the new units will be below market-rate, he added.

I don’t resent the millionaires ... but all the locals are moving out Kira Nelson

The lack of protections for tenants and an absence of local anti-displacement laws means that it’s entirely legal for Greystar to displace hundreds of residents and replace them with wealthier renters in the coming years.

“It’s been a tidal wave of displacement,” said Kyra Kazantzis, directing attorney of the Law Foundation of Silicon Valley, a local nonprofit. “We’ve seen increasing pressure on owners to sell and redevelop.”

Kazantzis said in her 24 years at her organization, she could not recall a larger single mass eviction than the Reserve case. A spokeswoman for the city of San Jose said officials believed it was the largest of its kind in the city.

But the city, like many municipalities in the region, encourages this kind of high-density development targeting higher incomes as part of its long-term plans to accommodate a swelling population and a rise in employment.

“This is one of our growth areas where we have plans to intensify residential and commercial development,” said Lesley Xavier, supervising planner for the city. “This is where San Jose is going to grow.”

City leaders’ comments about the need to grow offer little consolation to Reserve tenants who won’t be benefiting from the region’s economic development.

Greystar is offering to pay three months rent to low-income tenants who make 80% of the median income in the area or less, meaning less than roughly $76,000 for a family of four.

But on a recent afternoon at the complex – where red doors bear signs warning tenants they will have to leave next year – some said they make too much to qualify for the assistance but still expect to face significant financial hurdles in their pending evictions and relocations.

Elena Gaytan and her three children. Photograph: Sam Levin/The Guardian

“I’m upset, because it took so long to find this apartment,” said Elena Gaytan, a 35-year-old Mexican immigrant.

(Her 15-year-old daughter, Grecia, who translated an interview, added: “I feel upset. My school is close and I don’t know where we will move.”)

“We put applications everywhere. But nothing is affordable,” said her stepfather Carlos Trinidad, a 43-year-old roofer.

The couple, who have three kids, pays $2,300 for their two-bedroom, and Trinidad said the stress of the eviction has been difficult to manage. “It’s too much pressure,” he said. “I try not to think too much about it.”

Gabriella Sandoval, a 27-year-old receptionist, said she and her husband, a painter, both grew up in San Jose and feel helpless in the wake of the planned demolition.

“Prices just keep going higher and higher,” she said. “There’s nothing we can do.”