Can Big Tech solve the housing crisis? That’s the hope behind recent announcements by Apple, Facebook and Google, which together total $4.5 billion in grants and loans to remedy the affordable-housing crunch in California and the Bay Area. Microsoft last year pledged $500 million to relieve Seattle’s similarly stressed market. While Amazon’s opposition torpedoed Seattle’s attempt in 2018 to raise revenue for homelessness services, the company has embarked on a range of philanthropic housing ventures, including turning over a large chunk of one of its office buildings for use as a shelter for homeless families.
These moves, and the public reaction to them, reflect a common presumption: Tech broke the system, so it’s time for tech to fix it.
But don’t blame this economic crisis on the tech bros.
The spiraling housing costs in West Coast tech hubs are the result of 40 years of tax and land use policy — a period that mirrored the explosive growth of the tax-averse tech industry. This was also a time of continued activism by homeowners against higher-density zoning. Together, this has severely limited housing construction, particularly lower-cost houses and apartments. It is a chronic condition, inflamed by the current tech boom.
California’s saga began in the 1970s, when sprawling growth and spiking taxes seemed to threaten the quality of life so many came to the Golden State to find. Citizen activists created “urban growth boundaries” and land trusts to preserve open space and delicate coastal habitats. Yet these important moves also limited where developers could build new homes. Meanwhile, homebuilders chafed under what they saw as burdensome state rules about how many approvals they needed to build new housing.
Then came Proposition 13, a ballot initiative that passed in the summer of 1978 to slash property taxes. It has altered the way California has grown. By keeping property taxes low for longtime homeowners, Proposition 13 created clear winners and losers in the California housing market. “There has been a huge shift in the tax burden to young families from older homeowners and owners of businesses,” the Times noted in 1988. Cash-hungry cities opted to zone for commercial uses, which would generate sales taxes, instead of affordable housing. When houses got built, steep “impact fees” drove builders toward more expensive homes, whose buyers could absorb the costs.
Through all of this, California’s political leaders raised the alarm about housing affordability. In 1980, Gov. Jerry Brown formed an Affordable Housing Task Force, declaring that 60 percent of Californians were priced out of the market. By 1991, two-thirds of the 25 least affordable cities in the nation were in California.
There was some substantive action: In 1994, two of the state’s largest pension funds announced more than $340 million in construction loans for affordable development. But 25 years later, distressingly little has changed. California is America’s largest economy; but when its politicians have pushed to diversify its housing mix, they have been batted back by homeowners who resist new development in their neighborhoods.
But Proposition 13 has meant that city governments have few fiscal incentives to encourage private companies to build more housing. An important part of Apple’s housing plan, for example, involves developing land that it owns in San Jose. That property is zoned as industrial, so if it shifts to residential use, which generates limited property taxes, San Jose stands to lose tax revenue. This is a Catch-22 for a city desperate for both tax revenue and new, more affordable housing.
Seattle also has an affordable-housing shortage that predates the tech boom. Since its first zoning restrictions in 1923, the city has steadily expanded single-family residential zoning in ways that have limited housing supply and preserved racial and economic segregation. Today’s Seattle is larger, richer and more crowded, but remains overwhelmingly a city of single-family homes. The city abandoned plans to increase housing density in some neighborhoods after pressure. Washington State capped property taxes in 2001, creating a resource squeeze in even its wealthiest suburbs.
While tech is not responsible for this state of affairs, it has helped maintain it. Research has indicated that tax cuts have little effect on overall tech investment, yet industry leaders have consistently lobbied for them. They seek low-tax environments and have taken full advantage of deductions and incentives to effectively zero out their federal tax bills. Their billion-dollar housing promises are only a fraction of the taxes they might otherwise pay.
Until recently, tech workers haven’t had to worry too much about state and local politics. Their suburban campuses were comfortable bubbles. Company buses zoomed through traffic-choked highways; generous pay packages covered high rents and hefty mortgages.
Now, tech companies are increasingly moving into large cities where housing challenges can’t be ignored. Their suburban outposts are getting crowded, too. A decade ago, it would have been hard to imagine that companies like Facebook and Google would get into the housing development business. Now it’s hard to imagine how they could not.
Yet years of diminished faith in government and increased faith in tech have left things out of balance. We look to Big Tech to solve the housing crisis, when the solution involves things only government — and voters — can do, like changing land use rules and tax laws. And tech’s billions will mean little if homeowners continue to oppose new development.
The only way the status quo will truly shift is if the voices calling for more density and affordability become stronger than those against it.
Here is where tech workers again come in. They are disproportionately young and highly educated, and they often have a strong preference for dense, walkable neighborhoods. They care about making cities more livable and affordable for everyone. And they vote.
What might Seattle and San Francisco look like if more tech workers became engaged in state and local politics? What if companies didn’t only put up money, but worked to change laws constraining the housing supply? What if tech leaders and workers were willing to pay more taxes for better urban infrastructure and a higher quality of public services?
The tech bros did not create the housing crisis. But they can help fix it.
Margaret O’Mara is a history professor at the University of Washington in Seattle.