History teacher Leon Sultan was raised in a San Francisco that working class families could call home. That place has, for the most part, vanished.
The city is now the centre of America’s thriving tech industry, with some of the highest housing costs in the US. Homeownership is in retreat and homelessness is surging, alongside newly-minted fortunes. Mr Sultan, and many others, blame the changes on the Bay Area’s tech boom, which has created vast wealth divides… The growing backlash has played out in fights over new taxes targeting tech and protests against the commuter buses that ferry workers south from San Francisco to Silicon Valley, where many tech giants have their headquarters.
For years, the tech giants have faced down their critics unabashed. But now there are signs of change. In June, Google said it would invest $1bn in housing and Facebook has also pledged $1bn. Apple upped the ante this month, saying it would devote $2.5bn to the issue. “We know the course we are on is unsustainable,” Apple boss Tim Cook said as he revealed his firm’s plans.
But California State Senator Scott Wiener, whose district includes San Francisco, says the plans represent “a drop in the bucket” compared to the money and policy changes needed.
“I’m glad that Apple, Facebook, Google are doing this, but I think we also have to be crystal clear that this is not going to solve the problem.” Senator Wiener blames policies that hamper development – like rules that limit the height of buildings – for much of the growing gap between supply and demand.
MacDailyNews Take: As we wrote earlier this month, “Apple’s $2.5 billion might have been better spent promoting legislation to overhaul California’s zoning laws.”
I’m actually confused as to why people say the housing problem is Apple’s fault. I know the problem is exacerbated by the high paychecks Apple people get, but how is that Apple’s fault? I mean, do they want Apple to pay their people less? They already pay about 24% of their profit in taxes. Seriously, I’m not trolling here. Explain it to me!
Fault probably isn’t the issue. Making sure your workforce have housing options is.
A partial explanation, Mike:
When I took a course on Civil Liability forty-odd years ago in law school, the Professor kept harping on the issue of how to equitably spread losses in a society where losses are inevitable. Who is responsible may be less important than who can help solve the problem with the least pain.
One way to deal with damages is just to let the people who are hurt bear all their own losses. Another is by encouraging almost limitless lawsuits to assess fault and apportioning the losses against the parties who lose at trial. Another is to figure out how the parties can spread the loss so as to avoid any one individual or company from being catastrophically affected by a situation they did not create single-handedly.
That is the theory behind no-fault insurance. Losses are shared among all the policy-holders so that none of them is destroyed. Yes, it may let guilty parties off the hook to some extent, but that is still cheaper than endless litigation.
That is the situation that Apple finds itself in. They did not single-handedly create the housing crisis in the Bay Area (and Austin), but they did move lots of people with very high salaries into an area where they could outbid the existing residents for the available housing stock. In doing so, they did not consider the impact on the community.
The result was a median $3524 monthly rent for 966 square feet in Cupertino, a median home price over $1.9 million, and overburdened infrastructure. Many even of Apple’s own blue-collar employees and contractors cannot pay those prices. Who is to repair those homes, haul away their garbage, and patch potholes in the streets that lead to them? Somebody has to, and they need to live someplace. It is reasonable to expect the tech firms to contribute to the solution as well as the problem. They are in a better position to spread the loss than the homeless individuals are.
Big corporations have a target painted on their backs by the public. If they are not seen as having sympathy for their neighbors and as part of the solution, they will be seen as a problem that can be “fixed” by overweening government action. The companies can either kick in voluntarily or they will be forced to pay far more in taxes and inconvenience.
Changing zoning laws and raising the height of buildings seems great until the next SF earthquake happens and thousands are killed, jumping off buildings or burned alive.
According to GEICO, when you’re a politician, you blame others for your problems. It’s what you do…
The IT sector overall pays top dollar for hires in the Bay Area. That certainly has driven up house prices. The rate of building new housing has exploded in the last couple of years. Not just single family homes but also condos. However the price of those new units will be high and certainly will not be in the budget for lower incomes.
I’m not too sure how much 4.5BB will buy in terms of land and cheaper housing. Sounds like a lot but with SFH going for 0.75-1.5MM land prices are very high. The question is will be prices really be significantly lower to be useful.
Redeveloping old run down areas maybe the best approach. First they are not necessarily efficient in terms of density (often being single or double story condo and second being in a central location). Challenge is that building on non-virgin land takes more time, costs more and displaces existing tenants. The key is that when the new buildings become available the rent has to be reasonable to allow lower income tenants to afford them.
With a median price of 1.9 million, what would be low income housing be, $1 million?
In California, the cost for the building permits is higher than the construction cost of the house. That may have something to do with the high cost of housing. Let’s see, San Francisco, New York and Austin all 100% owned and operated by Democrats. And amazing the housing is unaffordable. Try a different political party for a few decades and the problem might go away. Just don’t go Green.
Your on the write track Kent, democrats are perfectly happy to grease the skids on permits though if it means construction of of high-density communes close to trains that will zip comrades to their Faceborg cubicles. The more local community cohesion is smashed by placing multi-story apartments in or next to single family home neighborhoods, the better.
Ok, so your premise is that Democrats support unpopular regulations that makes housing so expensive that only Republicans can afford it?
It’s called free enterprise, high pay checks, come with great companies, research labs, schools, and infrastructure, most of the red states have none of those things, also notice the only area similar in Texas is between Austin and San Antonio hint it is the only places in Texas worth living in.
And the uber rich tech executives don’t mind housing at crazy prices. It keeps the riff raff living a long way off. Of course, their many gardeners and maids and nannies and plumbers and cooks and waitresses have to live in the streets or commute 100 miles to serve their leftist uber rich masters,
More kent hyper-partisan BS.
Who are the idiots who passed a tax cut stimulus package when the economy was already growing (slowly but steadily) and the unemployment rate and interest rates were already near historical lows? These tax cuts benefitted the rich – mostly GOP – and have led to a rapid increase in the annual deficit, roughly doubling to over $1T in a couple of years. Same old GOP story of tax cut-and-spend leading to the same terrible results. Once again the Democrats will get elected to deal with the inevitable economic crash (1987, 2007, and early 2020s?) and the tax increases will fall on the back of the middle class.
Don’t try to feed me your California BS. Take a look at Alabama, Louisiana, Texas, etc.