In 1848, it was the lustre of gold which lured thousands to California. Today, cutting-edge technology is the Golden State’s draw, especially in the Bay Area. But Silicon Valley’s limited housing supply is squeezing out locals. It risks undermining outsiders’ access to the tech boom and is contributing to a surge in homelessness that is shaming a region that is a byword for wealth and innovation. An eye-catching $2.5bn donation by Apple to the state this week is part of a broad, if belated, effort by Big Tech companies to support local communities. Building more housing, however, will require overcoming current residents’ resistance.
Apple said $2bn of its donation would go towards an affordable housing fund and helping first-time buyers. Smaller amounts are set aside for homelessness and a specific Silicon Valley housing fund. Earlier this year, Facebook and Google pledged $1bn each for similar initiatives in California. To the north, Microsoft offered $500m to tackle the housing crisis in Seattle in January.
San Franciscans face median house prices of $1.6m, six times the national average. Big Tech companies are often blamed, and their high wages have certainly played a role in inflating prices. The far bigger issue is a housing deficit that stretches back decades, the result of zoning laws restricting new residential building. Current residents and local politicians have stymied attempts to change them, concerned about increased congestion, and the belief that they give the state government too much power. In May, a state bill to reduce local governments’ capacity to block development was shelved until 2020.
The housing crisis is not unique to the Bay Area. Across California and in other tech-driven cities such as Seattle, the construction of affordable housing is not keeping pace with demand from new residents. But San Francisco’s restrictive laws make it the most acute example. Some residents are voting with their feet and leaving the state. Public servants are among those which Apple wants to help with its first-time buyer scheme. Without more housing, San Francisco risks seeing the businesses which drove its growth relocate to less expensive locales.
The lack of affordable housing has also exacerbated the homelessness problem. Official statistics show that the number of people living in vehicles such as trailers, or even cars, has increased by 45 per cent since 2017. By last year, California had nearly a quarter of the total US homeless population. The tech capital of the US is just as well-known for tent cities. Seattle also suffers from this problem, with the third-largest homeless population by number in the country in 2018.
Big Tech’s donations look impressive, but simply making more cash available for the state government will not solve the underlying issues. Companies also need to work in collaboration with local authorities to convince recalcitrant residents that development is not inherently negative. They can design housing which will not exert pressure on existing services while helping to address the transport crisis that has been another byproduct of the Bay Area’s boom. Google’s plan for a community in San Jose called Downtown West would include houses, shops, and office space.
Work should not stop at the edge of cities. Regional visions of development should be pursued, including better transport networks and home-building further afield. The West Coast offers some of the most economically dynamic cities in the US. Yet unless the housing problems are addressed, many people will find themselves shut out.