Tech companies in the San Francisco Bay Area are typically associated with excessive wealth, greed, innovation, and general unaffordability for most. The lack of affordable housing in the region is relatively recent, as it was already somewhat expensive before the tech boom. Once the tech boom happened, and the region known as "Silicon Valley" began to form, prices of everything around it skyrocketed. This meant that lifelong residents all of a sudden couldn't afford property tax or many other goods and services they'd always been able to afford.

There's no doubt that these tech companies coming in have contributed to homelessness as affordable housing has been demolished to accommodate them in the past. However, all is not lost in this regard. Back in 2019, Apple announced that it would be part of an initiative to construct housing intended to accommodate people of all incomes in the area. It promised a total investment of $2.5 billion to offset what companies like it have done to affordability in the region.

What's the Deal?

Apple is only fronting the capital for this program. Since it has never been an architectural or construction company, it's essentially mimicking what the federal government does to encourage lower-income housing to be constructed. Known as the "Apple Affordable Housing Fund", there are indeed $2.5 billion in grants available.

However, developers have to apply to the program with a business plan and demonstrate how they will obtain materials. The Fund is a non-profit, and it essentially issues some grants and some loans to development companies who are willing to work with it. There are some constraints, but most qualified developers have an opportunity to take part in it.

What Else Is Apple Doing About Housing?

Apple is going all out to help the Bay Area remain sustainable. One of the chief concerns is that people are leaving the area in droves, and this number goes up every month. The most-cited reason for leaving is lack of affordability. Apple owns a good amount of land in the region, so they're donating $300 million of land in San Jose that they currently own to projects to build affordable housing there.

Apple also established a $1 billion "affordable housing investment fund" and $1 billion towards a first-time home-buyer fund. The reason for the latter is that the Bay Area is facing record lows in terms of homeowners. Houses are too expensive to own, and many people who long dreamed of living there have left for places where they could realistically afford a decent house on their own. Additionally, many other states already offer first-time homeowner assistance for free with public money.

Will These Initiatives Work?

While there's no doubt that what Apple is doing will create more housing units, a good amount remains to be seen. Developers have until March 24, 2020, to submit full proposals, not giving them too long to get everything together. Since it's a private program, the level of transparency will be whatever Apple decides it is, unlike if it were government-funded. In other words, it's quite possible that this will make the Bay Area viable again. The biggest variable is the true rental cost of these units.

Many speculate that these "low cost units" will still cost far more than the national median rent. This is fair speculation, as there are plenty of documented cases of high-paid tech workers living in RVs due to lack of affordable housing. Apple has not set explicit guidelines for the maximum rent can be or the selection criteria but has promised to make it fair.

Those interested in participating in the program will simply need to wait and see if they're eligible. Regardless, it will be a program other than Section 8 that allows those with lower incomes to have a home. It does not, however, come close to eradicating the California housing crisis. This is largely because California itself is mainly desert, and the coastal regions with great weather are already overcrowded.

The Takeaways

Regardless of whether this initiative works or not, it's an impressive move by a private company. Donations to charities for tax deductions is nothing new, but no company has ever set out on such a bold housing endeavor before. This will likely hit close to home for their employees, as well, since they likely know low-income people who would benefit from being able to rent a unit.