Billion-dollar tech companies, most notably centered in and around Silicon Valley, are simultaneously the cause of and potential solution to soaring housing costs leaving an increasing number of people homeless.
As Malo Hutson, director of Columbia University’s Urban Community Health Equity Lab, opined: “How much cash is Apple sitting on? How much cash is Google sitting on? To me, not to do something is immoral.”
So just how moral has the tech sector been? Let’s look at both sides of the fickle relationship between affordable housing and America’s tech sector.
Big Tech at Odds With the Little Guy
San Francisco has been described as the canary in the coal mine that is the housing crisis in America. Marc Benioff, CEO of Salesforce, based in the Bay City, told CNBC’s Sara Eisen: “San Francisco is kind of a train wreck. We have a real inequality problem. It’s because of the tech sector … We have to look at San Francisco and say here’s the best technology example in the world and yet the worst homelessness.”
The link between billion-dollar tech companies with sky high IPOs and unaffordable housing has existed for some time. And this makes sense. People with higher incomes are often willing and definitely able to pay more for housing. If sellers can get more money for properties, they will understandably start to increase prices. Compound this with limited supply and increased demand and one can easily see why housing prices are making home ownership in the Bay Area unobtainable to many non-tech sector workers.
Let’s look at an example of this: Apple employees. Ten years ago, the gap between the average Apple employee’s home and the average San Francisco home was approximately $150,000. Five years later in 2015, the gap is closer to $400,000. The trickle-down result? The Atlantic puts it this way: “When Apple Employees move in, housing prices go up.”
While the Cupertino-based company is not single-handedly accountable for the spike in housing, this is a case in point of the housing crisis Big Tech helped build. And when your company’s own employees can’t afford to live where they work? Well it might be time to do something.
Big Tech to the Rescue?
Perhaps it’s that last point motivating West Coast technology companies to take a renewed interest in affordable housing. Companies like Google, Microsoft and Facebook have been active players in housing development and low-income housing philanthropy. Let’s take a look at a few examples.
Back in 2018, Google made a splash when it revealed big plans for a development in Mountain View, California. The vision consists of office, retail, public and residential space. It’s that residential space that is particularly significant – 6,600 units, 20 percent of these qualifying as affordable housing. Despite the dystopian vibes of the conceptual artwork associated with Google’s project, it’s lining up to be one worth watching.
Microsoft
Early in 2019, the Redmond tech giant pledged $500 million in an attempt to address the affordable housing shortages afflicting the Puget Sound region. Significant for several reasons (it was the largest pledge in the company’s 44-year history, for example!), most of the money will be directed towards increasing options for low- and middle-income earners. Some cynics state that Microsoft is trying to pressure policy makers into doing their own bidding. That’s because 95 percent of the money pledged will actually make money for the company. Here’s hoping the injection of funds will have an overall net positive effect on housing affordability in one of America’s most expensive communities.
Not one to be left out of a philanthropy party, Facebook announced its own $500 million housing fund just a few days later. The ambition of this one is to collaborate with local nonprofits and real estate developers to build 8,000 new homes in the SF region over the next 10 years to satisfy affordable-housing criteria.
What People Are Saying
As good as philanthropy makes us all feel, there are noteworthy concerns about why Big Tech is investing into housing. As Vice’s Ankita Rao explains, the more dependent housing is on dollar injections from these technology giants, the more influential they become in shaping where and how people live.
Joel Kotkin of Chapman University in California says: “These companies are so dominant. There’s only a few people who have money, and even in doing things that are necessary, it’s going to be affordable housing they want.” And seeing that California is facing such a dramatic dearth in housing, the usual checks and balances that would be in place to resist new power players in what should be governmental policy building are absent.
On the other hand, age-old wisdom states one shouldn’t look a gift horse in the mouth. It’s just hard to tell what this particular horse really wants.
