By Chand Bellur
March 3, 2020 at 6:35 p.m. PDT
- The rapid expansion of tech corporations created a massive housing shortage in the San Francisco Bay Area.
- The median rent for a one bedroom apartment in the Bay Area is over $3000 per month.
- Most tech companies have done little to combat the housing shortage, with Facebook and Twitter opposing legislation to aid displaced residents and the homeless.
San Francisco Bay Area Housing Bubble Displaces Middle Class
It’s either a feast or a famine in the Bay Area. In good times, anyone who can say “java” can earn $150,000 a year, but it won’t go far. With exceptional rents eating away at income, the average Silicon Valley resident has no hope of affording a home.
The best case scenario is for a middle class couple to “slum it” for a few years, saving enough to buy a home when the housing bubble bursts again. The problem is, they might not have jobs when it happens.
Economic downturns in the Bay Area are brutal. Seasoned software developers often end up doing quality assurance, as only the best and brightest are writing code at the few, remaining tech firms.
Most people lose their jobs and move elsewhere. They have little attachment to the Bay Area, having lived there for only a few years. It’s a transient community, where people stay in the area for 18-36 months. It’s best to measure their residency in months, not years, as it is so ephemeral.
Given these issues, one would expect obscenely wealthy people to be somewhat concerned. There is open class warfare in San Francisco, with protestors violently attacking tech commuter busses. Unfortunately, apart from Mark Benioff of Salesforce, few corporate leaders have expressed genuine concern.
Apple is finally doing something to address the housing crisis in the Bay Area. Unfortunately, it may be too little, too late. Nonetheless, the company just pledged $150 million to build affordable housing in the San Francisco Bay Area.
Apple Affordable Housing Fund
Apple’s Affordable Housing Fund is an effort to address a massive housing shortage in the Silicon Valley. Decades of tech bubbles and a lack of urban planning have resulted in one of the world’s most absurd housing markets. Tenants and homebuyers are expected to pay top dollar for tiny, decrepit and moldy old homes.
The Cupertino tech company pledged $2.5 billion for the entire program, however, only some of these funds will go to build actual homes. The bulk of the fund is earmarked for home loans, which actually generates profits for Apple. Like many large tech corporations, Apple is now getting into the home loan industry, under the guise of altruism.
The actual amount dedicated to building homes, $150 million, is paltry. At best, this will build about 100 single family homes. Such a small effort won’t even put a dent in the Silicon Valley housing crisis.
Recession Will Yield Affordable Housing
As someone who currently owns a condominium in the San Francisco Bay Area, the market benefits me to some extent. Unfortunately, the overcrowded conditions in my complex have made my home unlivable. A building that is designed to house 250 people now holds almost 400. It’s getting absurd.
The bottom line is that no tech company will really do much about the housing crisis. The San Francisco Bay Area has always been about bubbles and hype. From the 1849 Gold Rush up to today, the region faces explosive economic expansions and crushing recessions.
If anything, tech corporations are using the housing market to generate favorable public relations and enter into the mortgage lending business. They’re addressing the problem they created by exploiting it even more.
The Bay Area housing crisis will be resolved, but only when the tech bubble bursts. In the aftermath, those who are responsible and saved up will be able to pick and choose from a variety of affordable real estate. Of course, if they’re no longer employed, there’s little reason to stay in the region.