With the cost of housing reaching sky-high levels in many West Coast cities, a number of technology companies have stepped in with pledges of millions of dollars to try and reverse the situation.
Microsoft for example, in January announced it was committing $500 million to pay for affordable housing, while Google recently said it would commit $1 billion to solve housing affordability challenges in the San Francisco Bay area. Others, including Amazon and Salesforce, have also pledged money to help solve the problem.
“I think everybody is seeing now how the housing crisis is intersected, that it matters that there’s not places to live, not just for engineers, but for teachers, and for nurses, and for people who work in retail, and for people who grew up here,” Kevin Zwick, CEO of Housing Trust Silicon Valley, told GeekWire in an interview this week. “When there’s not enough housing for any of those people, then everybody is affected negatively.”
But some analysts say the pledges from tech companies, although helpful, won’t do much to actually solve the problems in the area.
“If there’s just someone who steps up and says, ‘Hey, I’m a really rich person, I want to give $500 million to affordable housing,’ everyone will think it’s great—until you actually do the math,” Gregg Colburn, an assistant professor of real estate at the University of Washington’s College of Built Environments, told GeekWire.
Colburn said the investments just aren’t enough, because each unit costs between $250,000 and $350,000. That translates to less than 2,000 new homes overall. But in Seattle for example, the gap between the affordable housing needed and what is currently available is about 185,000 units.
“This is not a millions of dollars of problem; it’s a tens of billions of dollars of problem,” Colburn said.
Microsoft is attempting to do more with its money, by committing $475 million in loans to developers of affordable housing. The idea is that once those loans are paid off, it will lend the money out again to support more such projects.
But Zwick agreed that this still isn’t enough to solve the West Coasts’ affordable housing challenges.
“None of the efforts—it’s not enough,” Zwick said., He explained that local governments still need to approve new housing and zoning to allow more affordable units.
“But it’s a start,” he said. “It’s a new sector coming into the space and I think if we could show that it results in real housing, then I would hope this isn’t a ceiling to the amount of funding going in, but rather technology companies and other employers will continue to try to invest in housing.”