Apple is following other major technology companies in trying to stimulate more affordable housing options in California. But it’s uncertain how much the companies’ actions will help alleviate the state’s housing crisis.
In a statement on Monday, Apple said it’s committing $2.5 billion to improve affordable housing in the state. Apple’s efforts are the latest by tech giants, including Facebook, Google, and others to combat what has become an increasingly worrisome lack of housing for people of average or low income in California. At least so far, no permanent solution is in sight.
Here are some of the ways that big tech is responding:
The California housing crisis
Due to the influx of high-paying jobs and a general shortage of new construction, housing costs across California and Silicon Valley have skyrocketed. That has made it difficult for low- and moderate-income earners, including government employees like teachers and first responders, to afford to live in–or even near–the towns and cities where they work.
Families with a median income of $100,000 could afford to live in only 28% of the housing in Bay Area neighborhoods in 2018, down from 70% in 2012, according to a study from the San Jose Mercury News earlier this year.
Apple says that the Bay Area is seeing a mass exodus of people who have lived there for all of their lives, but simply can’t afford to remain anymore. Homeownership in the area is at a seven-year low, according to the Census Bureau. And 30,000 people left San Francisco between April and June because of inadequate housing.
The State of California, which has said the state needs millions of additional affordable homes to accommodate its population, has called on more companies to help address the problem by building affordable housing.
Tech companies helped cause the problem
Although the California housing crisis has been a problem since the 1970s, tech giants are contributing to making the problem worse.
Companies like Apple, Google, Facebook, and others have all grown tremendously in the last several years. To keep up with the growth, they’ve hired thousands of people, many of whom live in Silicon Valley near the companies’ offices.
That high-salaried worker influx has dramatically increased demand for housing in and around Silicon Valley. The new hires are able to push up prices for existing homes and apartments, while incentivizing builders to construct more high-end, not affordable, new units. That has left fewer low- and moderate-income earners with affordable housing options
How Apple will spend $2.5 billion
Apple outlined several components to its plan to spend $2.5 billion. Here’s a rundown:
- $1 billion will be placed in an affordable housing investment fund that will lend money to back low- and moderate-income housing construction. Apple says the fund’s loan program will be quicker and cheaper than commercial alternatives, but hasn’t yet specified exact interest rates or loan terms.
- $1 billion will be placed in a first-time home buyer mortgage assistance fund, with a particular focus on aiding essential service personnel, school employees, and veterans. The fund will subsidize first-time home buyers to help them afford required down payments and financing costs.
- $300 million of Apple-owned land in San Jose, Calif. will be offered for building affordable housing. Apple didn’t provide specifics on how it plans to make the land available.
- $150 million will be placed in a public-private fund with affordable housing partners Housing Trust Silicon Valley and others. The money will fund long-term loans and grants.
- Apple is donating $50 million to Destination: Home, a not-for-profit that’s trying to combat homelessness across Silicon Valley.
Since some of the money is being put in loan funds, Apple could earn a return on the investments. But the company says any returns will be reinvested in additional affordable housing efforts.
Other tech companies also back affordable housing
Apple is not alone among major tech companies in backing affordable housing.
Google announced in June that it would commit $1 billion to address the affordable housing crunch in Silicon Valley. Three-quarters of the money is dedicated to converting existing Google-owned land that is zoned for office space into 15,000 affordable apartments. Another $250 million will go to incentives for developers to build 5,000 more affordable units.
Facebook followed that with a $1 billion plan of its own in October. The social network said $250 million would go to a partnership the company signed with the state of California to develop affordable housing on state-owned land. Another $150 million would be used to build affordable housing in the San Francisco Bay Area, and $225 million would be used to develop 1,500 units of mixed-income housing in Menlo Park, Calif. Facebook also set aside $350 million for possible additional commitments to the those initiatives.
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