Some of Silicon Valley's biggest employers want to make it easier for their workers to find a place to live in the country's most expensive housing market.
The networking site LinkedIn has invested $10 million in an initiative by Housing Trust Silicon Valley to create more affordable housing in the Bay Area. A piece of LinkedIn’s investment to the trust's TECH Fund was used to purchase a development site in Mountain View, California, for 70 apartments that will be priced at below-market rates.
- How tax reform could make housing affordability even worse
- This is how long it takes to sell a house
- You have to pay nearly $1 million just to view these apartments
- In growing numbers, renters are taking a pass on the American Dream
- Rising construction costs are hurting first-time homebuyers
- Behind the surge in luxury-home sales
- More evidence student debt is a drag on US homeownership rates
- Inventory conundrum: Housing prices up, sales down
- 39M households paying more for housing than they can afford
"We must all take ownership of the affordable housing crisis in the Bay Area, and invest in compassionate solutions," said Katie Ferrick, head of community affairs at LinkedIn. "This partnership with Housing Trust through the TECH Fund is a creative way to make community impact investing a viable way for companies to address the need for housing."
Linkedin's investment comes a few months after Facebook unveiled plans to develop a 56-acre site across the street from its Menlo Park headquarters. When completed, the company's Willow Campus will be an "integrated, mixed-use village" with 1,500 housing units -- with 15 percent dedicated as affordable housing -- and 125,000 square feet of retail space, including a grocery store and pharmacy.
Late last year, Facebook ponied up $20 million to create a partnership of community-based groups. The partnership's first project is the Catalyst Housing Fund to "pursue innovative and scalable ways to increase the production and protection of affordable housing."
Also last summer, Alphabet, Google's parent company, announced it will invest $25 million to $30 million to build temporary modular housing for 300 employees. According to The Wall Street Journal, the units will be constructed by the start-up Factory OS, whose CEO told the newspaper that a similar project saved tenants $700 a month in rent.
Such investments are sorely needed in Silicon Valley and the Bay Area, largely because hiring by tech companies has created an enormous gap between the demand for housing and the supply.
The median sales price for a home in and around San Jose in the third quarter was $1,165,000, up nearly 17 percent from 2016, according to the National Association of Realtors. In San Francisco, prices were up more than 10 percent in third quarter 2017 to $900,000.
Increasingly, even highly paid software engineers are finding themselves priced out of the real estate market. One analysis estimated that tech company employees in San Francisco could expect to pay as much as 50 percent of their salary for an apartment within walking distance from work.
And, according to The Guardian, engineers at Facebook were so distressed by the rising costs that they reportedly asked founder Mark Zuckerberg to whether the company could subsidize their rents .