After two decades of extraordinary growth by tech companies like Google, real estate prices in the area have skyrocketed. This has fueled a shortage of affordable housing and exacerbating inequality. A small one-bedroom apartment near the company’s current headquarters costs about $3,500 a month.
Now Google saying it wants to be a good neighbor has plans to provide some relief. On Tuesday, it pledged to invest $1 billion in land and money to build homes. The company plans to repurpose at least $750 million worth of commercially zoned land it owns over the next 10 years. Google would work with local governments to allow developers to lease the land to build homes. Google, Facebook, Apple and some start-ups have concentrated wealth in and around San Francisco and Seattle. This has attracted workers to those areas from across the world. But the housing supply has not been consistent. As a result, buying or renting a home in those regions has become prohibitive for people outside the technology industry.
In January, Microsoft announced that it would allocate $500 million to help provide affordable housing in the Seattle area. That same month some philanthropists, including Mark Zuckerberg also committed $500 million to protect and expand affordable housing in the area. Google’s $1 billion is not a donation, since the company will likely still make money off leases to developers or low-interest loans. But Google may make far less money from the investments than if executives put the money in its core business.
Despite obvious and longstanding housing shortage, the state has struggled to find a political solution. The new governor Gavin Newsom campaigned on a promise to push policies that would lead to the construction of 3.5 million new homes by 2025 — California is on a pace to build about one million — but nothing that has happened in the Legislature suggests that goal will be even close to be met.
So a democratic state senator from San Francisco, has proposed a bill each of the past two years that would force cities to allow more dense housing near bus stops. His efforts have been met with fierce opposition from suburban homeowners who do not consider low-density living. This has yet to move bills beyond legislative committees.
A former city councilman in Mountain View, said Google’s pledge to repurpose the land was especially important given the shortage of land for new residential property in the area. He praised Google for its actions, but said the imbalance between new jobs and homes meant that unless Google stops hiring, the housing shortages would not be resolved. Alphabet, as Googles parent company, has continued to hire aggressively. It had 98,771 employees at the end of 2018, compared with 80,110 a year earlier.