Tech’s Housing Support Doubles to $5 Billion With Apple Pledge

(Bloomberg) -- This is becoming Big Tech’s year for housing.

With Apple Inc.’s $2.5 billion pledge on Monday, four of the most prominent U.S. technology companies have now committed a total of $5 billion to help solve the West Coast’s severe housing shortage.

Microsoft Corp. announced in January that it was giving $500 million to preserve and build more homes in the Seattle suburbs. Google and Facebook Inc. followed up with their own $1 billion initiatives for the Bay Area months later.

The money for housing comes at a time when tech companies have become a popular political punching bag, scrutinized for their market power, their role in spreading disinformation and their approach to user privacy. The initiatives also highlight the federal government’s retreat from housing assistance at a time of growing need.

“It’s further capitulation of the public sector to the private sector,” said Matthew Gordon Lasner, an associate professor of urban studies and planning at Hunter College in New York. These sorts of commitments are “a lot easier than raising taxes,” he added, and serve as “good public relations at a touchy moment for these guys.”

While there are many reasons for skyrocketing housing costs in the Bay Area and greater Seattle -- from tax policy to restrictions on land use -- the growth of Apple, Google, Facebook and Microsoft have played a part. The deep-pocketed firms employ tens of thousands of high earners who have bought or rented homes, leaving fewer options for poor and middle-income residents.

Recruiting Challenge

At the same time, the U.S. has been cutting housing assistance to the most needy. Since the late 1970s, the outlay has dropped by two-thirds, putting pressure on cities and states to help low earners, whose wages haven’t kept up with rising costs.

Even for tech companies that can pay big salaries, recruiting has become much more difficult in Seattle and the Bay Area because of the cost of living. They’ve addressed this, in part, by announcing expansions in cities such as Austin, Pittsburgh and Atlanta. But the companies are also trying to alleviate the issues in the cities where they operate.

“Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home,” Chief Executive Officer Tim Cook said in a statement Monday. “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.”

California alone failed to produce 3.4 million houses that it needed to keep up with demand from 2000 to 2015, according to an analysis from Up for Growth, a research and advocacy organization that promotes more development. Add in Oregon and Washington and the deficit is more than half of the new homes that were needed nationally, said Mike Kingsella, the organization’s executive director.

“From that standpoint, it’s no surprise that these major employers that are West Coast-based are leaning in,” he said.

The tech companies are still working out many of the details of their pledges. Some of their early investments range from low-cost loans to nonprofits to partnerships with new or existing government entities. Apple said Monday that its commitment includes $1 billion toward a state affordable housing investment fund to finance construction of new housing, and another $1 billion to help first-time home buyers with financing and down payments.

Apple, Google and Facebook have each said they’ll use company-owned land as part of their pledges. The iPhone maker said on Monday it will make property in San Jose worth about $300 million available for affordable housing.

Housing economists caution that the financial pledges are only part of the solution. What’s also needed is policy change. California this fall passed some of its most sweeping legislation in years to address housing affordability. But the state has been stymied on bigger changes that would spur more housing production.

As the state weighs new policy, the involvement of high-profile companies in the debate could help move the needle, according to Jenny Schuetz, a fellow in the Metropolitan Policy Program at the Brookings Institution.

“The money itself is nowhere near enough to fix the problem,” she wrote in an email. “But it is useful for private-sector employers who are not real estate developers to get involved in policy debates about housing.”

To contact the reporters on this story: Noah Buhayar in Seattle at nbuhayar@bloomberg.net;Kiley Roache in New York at kroache@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, ;Craig Giammona at cgiammona@bloomberg.net, Molly Schuetz

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