Tech Giants Pledge Billions for Housing, but Will It Matter?


SAN FRANCISCO — A mile from Apple’s headquarters in Cupertino lies the sun-faded carcass of the Vallco Shopping Mall. At the second it consists of empty, buff-colored buildings, acres of black asphalt and a pile of rubble the place the parking storage was once.

About a yr in the past, a developer submitted a proposal to construct 2,400 residences on the positioning, half of them backed to place rents under the market fee. The metropolis accepted the plan reluctantly, and afterward a group group sued. The challenge is caught in courtroom.

Stories like that cling heavy over Apple’s $2.5 billion plan, introduced Monday, to assist remedy the dire scarcity of inexpensive housing that has come to dominate life and politics in probably the most populous state. The pledge got here weeks after Facebook introduced $1 billion for the same program, and months after Google did the identical.

Beyond public relations, the strikes quantity to an announcement from a number of the tech business’s largest employers that they’re beginning to take a extra lively function in addressing the persistent regional housing scarcity that makes their growth tough — not simply for their staff, but for the general public at giant.

But don’t anticipate the cash to make a lot of a distinction. Just a few billion doesn’t purchase so much in California’s punitively costly housing market. Even if it did, the businesses’ bulletins have been accompanied by essential but principally unanswered questions like the place, how and when this cash shall be spent. And because the Vallco battle illustrates, the largest query is the one California has lengthy wrestled with: methods to get much-needed housing constructed when native governments and owners do every thing they will to stop it.

A typical affordable-housing deal can have a dozen or more funding sources that encompass state, local and federal housing programs, along with bank loans and equity investments from private companies. Tech companies are in a sense positioning themselves to join that pool to aid the construction of housing at all levels — supportive housing for the formerly homeless, middle-income housing for teachers and others priced out of the area, and market-rate units of the sort where their employees might live.

Few would disagree that putting money toward affordable housing investment is a positive move. Ms. Galante, the former head of BRIDGE Housing, one of the country’s largest nonprofit housing developers, was emphatic that more money for subsidized housing, whatever its source, must be part of the long-term solution. But in the context of California’s housing problems — which are rooted in intransigent local politics, not a lack of money — even the billions from tech companies can seem inconsequential.

Consider the math. At the moment it costs about $450,000, and considerably more in high-cost areas like the Bay Area and Los Angeles, to build a single unit of subsidized affordable housing in California, according to the Terner Center. That is by far the highest of any state, and just short of twice the nation’s median home value. And it’s not as if these are houses. The $450,000 figure is for an apartment of modest dimensions in a multifamily building, with standard layouts, bargain finishes and few of the amenities of for-profit development.

Given those figures, the $4.5 billion that Google, Apple and Facebook have earmarked would create about 10,000 housing units. To be sure, the companies’ money will stretch further on already-owned land, and it is likely to be augmented by other public and private funding sources, which is why Google and Facebook estimated that their investments would produce a combined total of 40,000 housing units in the Bay Area.

Even when the money is multiplied, however, the magnitude of the housing shortage remains pulverizing to any checkbook. According to a widely cited figure that originated with a 2016 report by the McKinsey Global Institute, California needs to build 3.5 million housing units by 2025 — more than three times the current pace — to address its shortage and regain any semblance of affordability. The theoretical cost is outlandish ($1.6 trillion), and while Gov. Gavin Newsom campaigned on McKinsey’s 3.5 million figure, his office now refers to it as “a stretch goal.”

None of this is to say that California’s housing problem is unsolvable, or that tech companies shouldn’t be helping. It’s to make the point that if single- or even double-digit billions were enough to even dent the problem, it would have been dented long ago.

High taxes are often cited, particularly by Republicans, as the reason California is a difficult place to put down roots, but the real cudgel is housing costs. After a decade-long growth streak in which California has consistently outperformed the nation by most economic measures, and despite a 4 percent unemployment rate that is the lowest on record, the state continues to see more people move out than in. That is: The cost of housing has caused people to flee one of the hottest job markets in the nation, in one of the most beautiful places on earth.

In fact, economists’ reports on the state’s outlook often cite housing costs, not trade wars or a tech bubble, as one of the biggest question marks for future growth. Over the past year, the Bay Area’s labor force — the number of people working or looking for work — has declined. Taken literally, the numbers imply that positions are being added by giving people second jobs and enticing workers to commute from outside the region.

“People say housing costs are driving people out of the state,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm. “No, housing supply is driving people out of the state.”

The Bay Area has added 676,000 jobs over the past eight years, and 176,000 additional housing units, a ratio far from the 1.5 jobs per housing unit that planners consider healthy. Cities like Palo Alto have ratios as high as four jobs per housing unit, which, judged by their swollen daytime populations, makes them more Manhattan-like than Manhattan.



Source link Nytimes.com

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