The Future of Housing May Be $2,000 Dorm Rooms for Grownups

Some have doubts

This article is part of Into the Valley, a feature series from OneZero about Silicon Valley, the people who live there, and the technology they create.

One of the most ambitious real estate projects in Silicon Valley is just getting off the ground in San Jose, on the 100 block of Bassett Street. As early as 2021, a massive, 803-bedroom high-rise apartment building will sit here, not far from the city’s major rail and transit hub. Most importantly, the building will be located a couple miles from a soon-to-come Google campus, which will have twice the office space of the Empire State Building and support 25,000 employees.

When completed, the building will look just like any other apartment complex from the outside. But inside, there will be one key difference: Every resident will get one bedroom to call their own, and that’s it. The kitchens, the bathrooms, the living rooms — really anything that might be considered a common area — will be shared between strangers. According to Jon Dishotsky, the CEO behind the construction, this co-living project represents the best way to create affordable housing in the most expensive place to live in the U.S.

A 36-year-old with a boyish swagger, Dishotsky is the co-founder and CEO of Starcity, a three-year-old startup that specializes in constructing co-living arrangements. Today, almost 200 people live in 11 different Starcity houses in California. If Dishotsky succeeds, that number will multiply many times over.

Starcity co-founder and CEO Jon Dishotsky.

Monthly rent for Starcity residences varies depending on the location, but generally ranges from $1,000 to $2,300. That fee includes utilities, Wi-Fi, basic essentials like dining utensils and toilet paper, a weekly cleaning service, and televisions with subscriptions to HBO, Hulu, and Netflix. Kitchens, bathrooms, laundry rooms, and living rooms are all shared. Some observers have likened it to college housing for grown-ups.

“It’s sort of like an upgraded version,” says Dishotsky, when we meet in late November at the company’s San Francisco headquarters.

Co-living, of course, is nothing new. Companies like Common and WeWork have pitched similar projects as a solution to the housing problems of America’s big cities. Just last fall, Common won a New York City-sponsored competition to build affordable housing in a massive new co-living project.

Dishotsky wants to bring a similar model to one of the most strained housing markets in the country. Starcity, he insists, is for people who are making way less than an entry-level software programmer — for anyone, he says, who has been squeezed harder and harder by the skyrocketing price of shelter in the Bay Area.

“Our focus is really solving for the middle-class,” he says. “We really wanted to prove that it is possible for people in the middle- and lower-income class to afford a nice, high-quality, class A place… And so, if you’re making $35,000 a year, you can afford to live there.”

“This is what passes for innovation in Silicon Valley. It’s a dorm. It is a very expensive dorm.”

Dishotsky says the makeup of current Starcity renters reflects this: tenants include tech workers, people in insurance, real estate, and finance, but also teachers, hotel workers, journalists, bartenders, and baristas. (How a low-income worker such as a barista would manage to afford a $1,350-room at Starcity is a bit curious. Even at San Francisco’s $15.59 minimum wage, a 40-hour-per-week worker would take home just $32,427 a year before taxes.)

In San Jose, the state’s housing crisis has reached a boiling point. A November 2019 report underwritten by the City of San Jose Housing Department outlines some of the grimmer statistics. Since 2005, median rent on regular apartments has risen in the city from $1,458 to $1,950. And almost 40% of all of San Jose’s 146,705 renter households makes less than $50,000.

In turn, more than half of the city’s renter households are “rent-burdened,” meaning residents pay more than one-third of their income to their landlords. To afford the rent for a one-bedroom apartment in a “Class C” building — defined as a “no-frills, older building” with “below-average maintenance and management,” which is a jargon-filled way of saying crummy — a person has to make $54,090 a year.