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Google will Build Affordable Housing

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Google will Build Affordable Housing

Wtih a one billion dollar investment, Google will buid around 20,000 houses in the San Francisco Bay Area within ten years. Zillow median home price in the city is ~$1.4 million.

https://www.cbsnews.com/news/california-housing-crisis-google-committed-1-billion-grant-bay-area/

According to HUD guidelines, qualifying as "low income" in the San Francisco area is to earn $82,000 for a single person.

Message 1 of 6
5 REPLIES 5
Frequent Contributor

Re: Google will Build Affordable Housing

The area's so out of touch with reality anymore. Such a shame.







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Message 2 of 6
Moderator Emeritus

Re: Google will Build Affordable Housing

I don't quite think this is as altrustic as it seems.

 

Google repurposing land they own means they're the owner, and if I were them I'd be building places for my employees to live in to keep salaries and bonuses lower and to help compete with talent.  Yes that will ease the burden on the housing market, but it also makes them a tremendous amount of cash in one form or fashion with land they probably weren't going to develop into further offices anyway since they're now opening up big facilities elsewhere.

 

If I see that just having been working in the Bay Area off and on for the last year, pretty sure someone (or even lots, I will say the folks I've interacted with from Google professional services have been sharp) at Google is smart enough to come up with that idea.

 

Play to win, Google unlike the recent non-trivial bank I was working for understands that.




        
Message 3 of 6
Frequent Contributor

Re: Google will Build Affordable Housing


@CramEiko wrote:

The area's so out of touch with reality anymore. Such a shame.



No.  That is the area’s reality. 

Message 4 of 6
Valued Contributor

Re: Google will Build Affordable Housing


@tacpoly wrote:

@CramEiko wrote:

The area's so out of touch with reality anymore. Such a shame.



No.  That is the area’s reality. 


Agreed. High CoL cities like SF are high CoL because there's a little space and a lot of people who want to live there. They didn't just arbitrarily say "oh let's be all expensive!" and jack prices up. If 5 million people suddenly all wanted to live in a small patch of land in the middle of rural Oklahoma, you can bet that land would similarly skyrocket in price. Ask someone living in the Salt Lake City area how real estate's working out for them now that the tech companies are moving in. They're in the early stages of it now.

 

I'm a bit skeptical that this will work long-term. Rent control and subsidized housing's been a thing here for a while, and it kind of works...for a while. The problems it has:

 

- Owners are effectively prisoners in their property. When you get into a place for 20% the cost of the surrounding buildings, you can't exactly afford to move if you later want to, unless you also move out of the area. It does help keep some lower-income people in the local area, but they tend to concentrate into the low income buildings and you effectively get economic segregation within neighborhoods.

 

- Affordable housing addresses a single aspect of high CoL cities, but lower income people will still struggle mightily to live in that area. I'll use my local area (Boston) as an example for cost comparions. Here, chicken breast is usually around $7/lb at the grocery store. Eggs can be $5/dozen, milk can be $5-6/gallon, depending on where you live. It's half those prices out in the suburbs, but lower income people tend not to be able to afford cars and may rely on mass transit so they're captive to the local stores.

 

- The problem is as much income inequality as it is lack of affordable housing. Unless you build so much additional housing as to completely flood and tank the local real estate market, gentrification will continue whether you like it or not. The reason people who make $50,000 can't find housing is because people who make $250,000 can't find housing, either. There's plenty of units for sale, but sellers wanna make money too so they all go for the whale jugulars. There's more money pandering to the rich with Viking appliances, Italian marble tile, and elevators in your condo than there is making affordable homes for middle-class people.

 

Google can do this, but unless there's some severe and long-term restrictions (decades), once those units start turning over after the first round you can bet some will have been remodeled as luxury and sold for much more, thus being removed from the affordable market and contributing to further gentrification.

Message 5 of 6
Valued Contributor

Re: Google will Build Affordable Housing

Which is why most people don't want tech companies moving into their neighborhood, as it increased rent that has been somewhat stable for years. Thus pricing them out of an area they've lived for probably most their life. If anyone stands a chance of being successful at building affordable Houseing, it would be Google. They have the resources availabe to build. Most people/investment companies have to make some kind of profit in order to make it cost effective for them to build. They too have to live/provide for family.

 

Google get all sorts of tax breaks, I've this happen locally. And also has caused an increase in housing costs due to lack of housing, with the unflux of workers. They just recently extended their contract for another 12 years here, so it would be nice if they did something locally to buld more housing. Another problem is that prices shouldn't really be this high, as we're not a major cosmopolitan area.

 

It might also reduce the risk of LIHTC misuse, has have often happened with investment companies. Unless of course Google also uses it to help them build housing as well, and then converts them to Luxury Condos after a few years. lol

 

Message 6 of 6
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