Search giant Google on Tuesday promised to invest more than $1 billion creating thousands of new homes in California’s Bay Area, continuing a trend among large companies to spend big sums on solving a growing housing affordability crisis.
Google CEO Sundar Pichai announced the investment in a blog post, writing that “over the next 10 years, we’ll repurpose at least $750 million of Google’s land, most of which is currently zoned for office or commercial space, as residential housing.” Pichai believes repurposing Google land alone should allow the company to support the development of at least 15,000 homes.
Additionally, the company plans to create a $250 million investment fund to provide incentives to developers who build affordable housing. That fund should lead to the creation of 5,000 more housing units across the region.
Finally, Google will also give $50 million in grants to nonprofits that focus on homelessness and displacement.
“Today, Google is one of the Bay Area’s largest employers,” Pichai wrote of the various investments. “Across the region, one issue stands out as particularly urgent and complex: housing. The lack of new supply, combined with the rising cost of living, has resulted in a severe shortage of affordable housing options for long-time middle and low income residents.”
Google’s promise to support affordable housing comes on the heels of an announcement from Microsoft to also spend $500 million on housing. Last month, Microsoft revealed that it wants to focus on housing that lies within an hour commute of its offices outside of Seattle.
Wells Fargo, which is headquartered in San Francisco, has also pledged to spend $1 billion over the next five years to support affordable housing.
Both Seattle and San Francisco have seen their housing prices skyrocket in recent years thanks in part to an influx of highly paid technology workers. The San Francisco region in particular routinely makes headlines as the most expensive housing market in the U.S.
San Francisco also has the world’s highest concentration of billionaires, and is now mostly made up of million dollar homes. Moreover, bidding wars in the city have recently picked up as a series of high profile tech companies such as Uber and Lyft go public, turning employees into instant millionaires.
Meanwhile, resistance among homeowners and some local politicians to new, denser housing has left local real estate markets lagging behind growth in population and wages. Cities also routinely thwart new construction by using zoning codes to outlaw any type of housing other than single-family homes. Such regulations effectively make it impossible to add housing near job centers and end up pricing out large numbers of would-be homebuyers and renters.
On Tuesday, for example, the New York Times reported that San Jose, the center of Silicon Valley, designates 94 percent of its residential land to single-family zoning. In Seattle, 81 percent of the city’s residential land is zoned exclusively for single-family homes.
Though such zoning restrictions are common in U.S. cities today, they are historical aberrations; older American metros such as Boston and New York, as well as Old World cities such as London and Rome, are characterized by a more diverse mix of housing types that includes a higher share of townhomes, apartments, and other high-density forms.
In his blog post Tuesday, Pichai explained he wants to “build quickly and economically,” and alluded to the idea that changing local zoning is a key component of solving the housing crisis.
“Our goal is to get housing construction started immediately, and for homes to be available in the next few years,” he wrote. In Mountain View, we’ve already worked with the city to change zoning in the North Bayshore area to free up land for housing, and we’re currently in productive conversations with Sunnyvale and San Jose.”
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