Apple pledges $2.5 billion for affordable housing in the Bay Area
California currently has a homelessness crisis. According to the United States Interagency Council on Homelessness, the state currently has as many as 130,000 residents experiencing homelessness on any given day, and nearly 35,000 people are believed to be experiencing chronic homelessness, meaning they have been without a home repeatedly for more than a year. Nowhere is the situation worse than in the Bay Area, where a rising cost of living and lack of affordable housing options has made it next to impossible for some to find consistent housing solutions. To help address this crisis, Apple announced a $2.5 billion plan meant to create new affordable housing options and get roofs over peoples' heads. Even if the program succeeds at its task, the large monetary commitment won't wipe out the housing crisis or Apple's own role in exacerbating the problem it's now working to solve.
Explaining the California housing crisis
The housing crisis in California is a relatively simple issue to understand. For years now, the state has suffered from a housing shortage. Since 2015, the state has added just 308 housing units for every 1,000 new residents, according to a 2016 study published by consulting firm McKinsey and Company. The result of that is California has 3.5 million fewer homes than it needs to support its population. The trade-off of a lack of available homes is the rising cost of existing ones. According to the Public Policy Institute of California (PPIC), the state has the highest home values and rent costs in the nation, and those prices continue to rise. The median home value in the state is $507,000, compared to a nationwide average of $201,000. In no area is this issue more prevalent than in the Bay Area, where tech companies call home. In San Francisco and the surrounding area, the median price paid for a home is $830,000. Likewise, rent in the region has become unmanageable for many. According to the National Low Income Housing Coalition's annual Out Of Reach report, counties in the Bay area account for five of the six most expensive places to live in the entire country.
These issues would likely exist in California regardless, but they have been deepened by the growing presence of tech companies populating the Bay Area. Over the last two decades, Big Tech has expanded its foothold in the region, led by the world's richest companies building massive campuses and venture capital money leading a major boom of money-infused startups that set up shop in the coastal city. As they inflate the median income in the area, the employees of big tech companies like Google, Facebook and Apple are some of the only people who can afford to remain in the city. Research published earlier this year found that more than half of all homebuyers in San Francisco in 2018 worked in the software industry. Meanwhile, rent in the city has also skyrocketed to levels that the average person can't afford. According to the Zumper National Rent Report, the average monthly rent for a two-bedroom apartment in San Francisco is now $4,500. The result is a sense of worry and uncertainty for a majority of California residents. According to a PPIC survey, 47 percent of Californians overall and 61 percent of renters in the state said housing costs are a major financial burden on themselves and their family, as many are paying more than 35 percent of their total household income toward simply keeping a roof over their head.
The effects of homelessness
The fear of homelessness isn't just about not having a roof over one's head — it's all of the other things that come with it. The effects of homelessness and housing insecurity can be devastating on individuals and families who are suffering from it. Homeless people are often the victim of abuse, according to the National Law Center on Homelessness and Poverty. It also increases the likelihood of dealing with illness and severe health conditions, as care is rarely accessible or affordable. Serious illnesses including HIV and AIDS, diabetes and tuberculosis are more common in homeless people than they are in the general population. Mental illness is often more likely to go untreated in homeless people. Food insecurity often accompanies homelessness, and can result in poor health outcomes. Homelessness also can result in broken families as some shelters will refuse to take people of a particular gender identity or can't provide shelter for children. At risk populations like members of the LGBTQ communities particularly struggle with homelessness because there are fewer resources available to them and they often struggle with issues of acceptance.
How will Apple's pledge work?
It's Apple's hope that its sizable investment will be able to help address these issues. Of the $2.5 billion that it has pledged, $1 billion has been set aside as part of an affordable housing investment fund. According to the company, the pot of cash will be available to the state and private developers as an open line of credit to build new housing designed for low- to moderate-income families. Another $1 billion will be used to establish a first-time homebuyer fund that will be distributed with the help of the state to aspiring homebuyers looking to purchase their first place. The fund will help with financing and down payment assistance, and is meant to be used largely by "essential service personnel" including school employees and veterans. The rest of the funds will be used to build $300 million worth of affordable housing on Apple-owned land in San Jose and establish a $150 million affordable housing fund in the Bay Area. The final $50 million will be donated to Destination: Home, which works with vulnerable populations in Silicon Valley to help combat chronic homelessness.
Andrew Aurand, the vice president of research at the National Low Income Housing Coalition, told Mic that Apple's contribution to help address the affordable housing shortage in California is "very much needed and appreciated." He also notes, "It’s great that companies are starting to recognize that the affordable housing crisis needs to be addressed, especially from corporations that have in some ways contributed to the problem."
He says that it's his hope that "a significant portion of these new homes are affordable to households with the lowest incomes — because it is these households who are suffering the most" and believes the contribution will be an "important start" to addressing the housing needs in the state. However, Aurand notes that "significant federal resources are also needed" to fully address the homelessness issue both in California and nationwide. He notes that California is currently has a shortage of 1.5 million affordable rental homes for low-income renters, but it isn't the only state suffering from this problem. "Most communities across the country face a shortage of affordable rental housing available to the lowest-income renters. It’s a national problem, so we ultimately need national resources to solve it," he says.
Aurand also notes that Apple's funding will go toward providing assistance to people who are on the edge of homelessness and at risk of losing their homes. Providing support for those in a vulnerable position is one of the better methods of preventing homelessness. As Aurand explains, "If a poor family has fallen behind on rent because of some type of financial emergency, we know that it is far better in the long-run to keep them stably housed through short-term emergency assistance than to see them become homeless."
Others have a less positive outlook toward Apple's actions. Senator and Democratic presidential candidate Bernie Sanders described the company's $2.5 billion effort as "throwing pennies" at a problem it helped create and expressed suspicion at the company operating housing on its own land. “Apple’s announcement that it is entering the real estate lending business is an effort to distract from the fact that it has helped create California’s housing crisis,” Senator Sanders said in a statement to Gizmodo. "We cannot rely on corporate tax evaders to solve California’s housing crisis.”
Apple isn't the only company to commit a chunk of its unimaginable wealth to addressing the housing problem that it helped to create. Other tech giants have made similar pledges over the last year. Facebook and Google have both promised $1 billion each to addressing housing shortages in the Bay Area and throughout California. In Seattle, where a similar housing crisis has started to develop, Microsoft has pledged $500 million toward affordable housing. Amazon, which also calls Seattle home to its original headquarters, has promised $8 million to addressing homelessness in the city. These are drops in the bucket for these multi-billion dollar corporations but could make a world of difference for families that are just trying to get by. Just don't mistake the pledges as pure altruism — these companies are working to fix a problem that they helped cause.