Silicon Valley Employers’ New Development: Housing
The housing shortage in Silicon Valley has employers like Google, LinkedIn, and Facebook paying attention. The tech giants have all dipped their toes into residential development—some with a focus on serving low- and moderate-income workers. While Santa Clara and San Mateo counties have been adding jobs and population at a rapid clip, new housing starts have not kept pace. As a result, the average rent is now above $2,000 per month and the median home price of $757,585 is nearly twice the median price for the state—and approaching that seen during the area’s housing bubble peak, according to Silicon Valley Indicators.
Alex Sanchez, executive director of the Santa Clara Housing Authority, says that proposals from Google and others would help increase workforce housing at a time when housing costs are pushing median-income families to neighborhoods far from business centers, increasing commute times and congestion.
Insufficient and unaffordable housing hurts all sectors of the economy in Silicon Valley and beyond, according to Zoe Mullendore, senior associate for housing and transportation policy at the Silicon Valley Leadership Group. A 2015 report released by the group found that housing scarcity and high prices affected employers in several ways in 2013, including the following:
- 65 percent of Silicon Valley CEOs reported employee housing costs as one of their top five challenges for doing business in the region.
- Average commute times rose faster in Silicon Valley than in other innovation regions in the country (e.g., Austin and Seattle).
- Silicon Valley commuters wasted 84 hours per year for a half-hour commute in delays because of choking traffic congestion.
The Silicon Valley Leadership Group report offered some solutions, via policy recommendations, to the growing challenge, including the following: support by area corporations for additional housing development in the region, advocacy for a permanent funding source for affordable housing at the state level, and investments in transportation infrastructure and housing across cities within the region.
Mullendore says the Leadership Group has made housing a priority for several reasons, chief among them that scarce housing in all sectors makes companies less competitive with firms in regions that support less expensive and more plentiful housing. She also points out that while every technology sector job creates five other jobs—generally in the service industries, such as restaurants and custodial and shipping businesses—those employees are least able to pay the high rental and mortgage prices.
Sanchez says that with the housing supply so low, people with vouchers for low-income housing find themselves competing with people able to pay higher rents than allowed under the program. With so many people vying for the same apartment, landlords will naturally choose the person in line who can pay more and whose tenancy does not come with the housing voucher requirements, such as having locks on all doors and windows.
The Silicon Valley Leadership Group has previously been successful in advocating for change, including a $17-per-square-foot fee that is used to help fund affordable housing programs. What’s different now, says Linda Mandolini, president of the nonprofit Eden Housing development firm, is that Google and others are stepping up to play a greater role in both advocating for and offering to help provide affordable housing.
Employers’ demand for more housing development and greater affordable options is not unique to Silicon Valley. All businesses, particularly those in high-cost locations, can face recruitment and retention challenges when local housing options are unsuitable for their workforce. If communities want to stay economically competitive, they need to answer this call.
As to what’s on the horizon?
“The future is definitely a lot of public/private partnership for affordable housing,” said Mullendore, who adds that the Silicon Valley Leadership Group plans to focus on homelessness in the region this year, because employers have seen that many workers paying high housing costs are just a paycheck away from losing their home.