Apple, Facebook and Google billions won't fill California's giant housing hole
- Apple, Facebook and Google have pledged to donate a total of $4.5 billion to help address California's shortage of affordable housing.
- Roughly 500,000 jobs have been created in the Bay area in recent years, but only 50,000 homes.
- Yet experts say such investments alone won't solve a problem that the state's vibrant tech industry helped create.
Some of Silicon Valley's biggest companies are promising to spend billions of dollars to help ease California's affordable housing crunch, but the crisis has grown so large that housing advocates say the combined commitments from Apple, Facebook and Google will barely scratch the surface.
Advocates said the money — more than $4.5 billion in corporate giving announced in recent weeks — is welcome and particularly noteworthy because it's coming from companies whose explosive growth has played a role in escalating home prices. Local employers also are finding they need more affordable housing in the region to help attract and retain employees.
But money alone won't solve the problem, housing experts say, because the true fix takes a combination of relaxed suburban zoning and permit regulations from local governments, aggressive home building over the next decade, public transportation alternatives, and a wider array of housing options beside single-family homes.
"I don't think any tech company that has made these new announcements are really thinking their single contribution is solving the housing crisis," said Kevin Zwick, CEO of Housing Trust Silicon Valley. "It doesn't solve the entire problem, but the fact that they're joining is a big, important, positive step to getting us to solve the crisis."
The origins of a crisis
With the average Bay Area home price now nearly $1 million, California faces "this housing crisis for a multitude of reasons," Zwick said.
First, large tech companies in the Bay Area began hiring people by the thousands and paying them above-median salaries. Then, the influx of tech workers drove up Silicon Valley's population and home prices. Finally, home-building costs rose, thus discouraging developers to build new apartment complexes and homes.
"In the Bay area, in the last several years, we've added half a million jobs and only 50,000 homes," said Edie Irons, communications director for Transform, a nonprofit that lobbies state lawmakers for more affordable housing and transportation options for Californians.
The average tech worker in San Jose and San Francisco earned more than $111,000 a year in 2018, according to the Computing Technology Industry Association, compared to around $76,000 for non-tech workers. Zillow data shows that Bay Area home prices on average grew from $245,000 in 1997 to $995,800 in 2018. Those figures, combined with San Jose and San Francisco areas building fewer homes, helped cause the crisis.
Californians have bemoaned the rising home prices for years and "now the companies that helped to create it are finally stepping up," Irons said.
What tech giants are offering
In response to these issues, some of Silicon Valley's largest employers have promised to help. Google announced $1 billion in June while Facebook pledged another $1 billion in October. Apple, earlier this month, said it would devote $2.5 billion. Among their various projects:
- Google will rezone $750 million of its land from commercial to residential so local governments can have at least 15,000 new homes built on the property. The housing created will include pricing for middle and low-income families, the company said.
- Facebook said $225 million of its pledge will go toward 1,500 housing units on land the company owns in Menlo Park and another $25 million will help build teacher housing in San Mateo and Santa Clara counties.
- Apple is setting aside $1 billion to help first-time home buyers make their downpayment and will use another billion to provide loans to organizations looking to build low-income housing.
Some leaders, including presidential hopeful Bernie Sanders, said tech companies shouldn't receive a standing ovation for their efforts because the crisis is largely their fault.
"Apple's announcement that it is entering the real estate lending business is an effort to distract from the fact that it has helped create California's housing crisis," the Vermont senator said in a statement earlier this month.
Irons echoed Sanders' comment and said the $4.5 billion "is a drop in the bucket" when the median home price in San Francisco is more than $1 million.
"It's absolutely throwing money at the symptoms and not very much when you look at the scope of the problem," she said. "That said, it is a step in the right direction and it's absolutely welcome."
Apple CEO Tim Cook said in a statement that the company, with 26,000 of its 123,000 total employees working in Cupertino, "is committed to being part of the solution."
"Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home, and we feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family and contribute to the community," Cook said. "Affordable housing means stability and dignity, opportunity and pride. When these things fall out of reach for too many, we know the course we are on is unsustainable."
Needed: 3.5 million new homes in five years
Fixing the housing crisis might be a monumental task, according to one research study. An October 2016 McKinsey report said California needs 3.5 million new homes by 2025 to close the housing gap. To achieve that, construction crews would have to build 500,000 new homes per year in a state that has only built 80,000 new homes on average annually in the past decade, according to state data.
Perhaps one way to increase housing production is for cities in Silicon Valley to re-write their zoning laws in a way that encourages taller, multi-family housing complexes, preferably near major transit hubs, Zwick and Irons said.
Another major boost could come from more companies contributing money in the wake of the tech giants, said Maurice Jones, CEO of the Local Initiatives Support Corp. Jones also serves as fund manager of a $500 million affordable-housing fund for the Partnership for the Bay's Future that aims to expand housing options to 175,000 families in the region during the next five years. Facebook recently contributed $150 million to the housing fund.
Jones said solving the region's housing crisis involves fixing public policy and transportation, while simultaneously building an abundance of housing. People should look at the tech company contributions as a start, not as the solution, he argues.
"You can definitely level the critique that this on its own won't solve it and you're absolutely right," Jones said. "But if we get more [companies] to emulate this, our chances are much greater."
