SAN FRANCISCO — A mile from Apple’s headquarters in Cupertino, California, lies the sun-faded carcass of the Vallco Shopping Mall. At the moment it consists of empty, buff-colored buildings, acres of black asphalt and a pile of rubble where the parking garage used to be.

About a year ago, a developer submitted a proposal to build 2,400 apartments on the site, half of them subsidized to put rents below the market rate. The city approved the plan reluctantly, and afterward a community group sued. The project is stuck in court.

Stories like that hang heavy over Apple’s $2.5 billion plan, announced Monday, to help solve the dire shortage of affordable housing that has come to dominate life and politics in the most populous state. The pledge came weeks after Facebook announced $1 billion for a similar program, and months after Google did the same.

Beyond public relations, the moves amount to a statement from some of the tech industry’s largest employers that they are starting to take a more active role in addressing the chronic regional housing shortage that makes their expansion difficult — not just for their employees but for the public at large.

But don’t expect the money to make much of a difference. A few billion dollars doesn’t buy a lot in California’s punitively expensive housing market. Even if it did, the companies’ announcements were accompanied by crucial yet mostly unanswered questions like where, how and when this money will be spent. And as the Vallco struggle illustrates, the biggest question is the one California has long wrestled with: how to get much-needed housing built when local governments and homeowners do everything they can to prevent it.

“These investments are an opportunity, because clearly the tech companies want to engage and want their money to make a difference,” said Carol Galante, faculty director of the Terner Center for Housing Innovation at the University of California, Berkeley. “And yet, this scattershot approach, not just with each of them putting out their own announcements, but not having them coordinated with the larger conversation about how we are going to make the public policy changes that the Legislature is struggling with — unless you marry those things together, it’s not going to work.”


The housing programs announced by Apple and other companies are not philanthropy but commitments to make affordable housing investments — for profit — in the form of corporate land and money. The details vary, but each company said it would allow housing development on land it already owned and issue loans whose terms and interest rates are implicitly more generous than the terms that nonprofit developers get from banks but whose true costs will take years to figure out.

Apple said its plan would, among other things, create an affordable-housing fund that would give the state and others “an open line of credit” to build more affordable housing beyond land that it owns. The company expects to make money from the financing but for the returns to be lower than what it would earn on investment-grade securities where corporate holdings traditionally lie.

A typical affordable-housing deal can have a dozen or more funding sources that encompass state, local and federal housing programs, along with bank loans and equity investments from private companies. Tech companies are in a sense positioning themselves to join that pool to aid the construction of housing at all levels — supportive housing for the formerly homeless, middle-income housing for teachers and others priced out of the area, and market-rate units of the sort where their employees might live.

Few would disagree that putting money toward affordable housing investment is a positive move. Galante, the former head of BRIDGE Housing, one of the country’s largest nonprofit housing developers, was emphatic that more money for subsidized housing, whatever its source, must be part of the long-term solution. But in the context of California’s housing problems — which are rooted in intransigent local politics, not a lack of money — even the billions from tech companies can seem inconsequential.

Consider the math. At the moment it costs about $450,000, and considerably more in high-cost areas like the Bay Area and Los Angeles, to build a single unit of subsidized affordable housing in California, according to the Terner Center. That is by far the highest of any state and just short of twice the nation’s median home value. And it’s not as if these are houses. The $450,000 figure is for an apartment of modest dimensions in a multifamily building, with standard layouts, bargain finishes and few of the amenities of for-profit development.

Given those figures, the $4.5 billion that Google, Apple and Facebook have earmarked would create about 10,000 housing units. To be sure, the companies’ money will stretch further on already-owned land, and it is likely to be augmented by other public and private funding sources, which is why Google and Facebook estimated that their investments would produce a combined total of 40,000 housing units in the Bay Area.


Even when the money is multiplied, however, the magnitude of the housing shortage remains pulverizing to any checkbook. According to a widely cited figure that originated with a 2016 report by the McKinsey Global Institute, California needs to build 3.5 million housing units by 2025 — more than three times the current pace — to address its shortage and regain any semblance of affordability. The theoretical cost is outlandish ($1.6 trillion), and while Gov. Gavin Newsom campaigned on McKinsey’s 3.5 million figure, his office now refers to it as “a stretch goal.”

None of this is to say that California’s housing problem is unsolvable, or that tech companies shouldn’t be helping. It’s to make the point that if single- or even double-digit billions were enough to even dent the problem, it would have been dented long ago.

“For 50 years, California has been designed around the idea that everyone will have a single-family home with a yard, that they will drive everywhere, and that geometry no longer works,” said Scott Wiener, a Democratic state senator from San Francisco who last year introduced a bill to make it easier to build housing near transit lines. “California cities have systematically made it hard to impossible to build housing, and money can’t fix that.”

As it stands, the housing situation is getting worse, with homeless counts rising in cities like Los Angeles, San Francisco and Oakland, despite costly efforts to ease it. The pace of California development is actually slowing, with some developers suspending projects because costs are so high that even multimillion-dollar condos and $4,000-a-month one-bedrooms won’t yield a profit.

High taxes are often cited, particularly by Republicans, as the reason California is a difficult place to put down roots, but the real cudgel is housing costs. After a decadelong growth streak in which California has consistently outperformed the nation by most economic measures, and despite a 4% unemployment rate that is the lowest on record, the state continues to see more people move out than in. That is: The cost of housing has caused people to flee one of the hottest job markets in the nation, in one of the most beautiful places on Earth.

In fact, economists’ reports on the state’s outlook often cite housing costs, not trade wars or a tech bubble, as one of the biggest question marks for future growth. Over the past year, the Bay Area’s labor force — the number of people working or looking for work — has declined. Taken literally, the numbers imply that positions are being added by giving people second jobs and enticing workers to commute from outside the region.


“People say housing costs are driving people out of the state,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm. “No, housing supply is driving people out of the state.”

The Bay Area has added 676,000 jobs over the past eight years, and 176,000 additional housing units, a ratio far from the 1.5 jobs per housing unit that planners consider healthy. Cities like Palo Alto have ratios as high as four jobs per housing unit, which, judged by their swollen daytime populations, makes them more Manhattan-like than Manhattan.

While tech companies are widely blamed for causing the housing crisis, policy experts say that it results from decades of political decisions — and that tech companies are merely stuffing workers into office buildings that local governments have repeatedly approved while resisting new housing.

Technology companies have largely been content to send fleets of private buses to ferry employees to work from ever-farther locales. But now even tech employees, despite high salaries, are not immune. Some tech executives say the prospect of a move to California, once an asset in recruiting, is now a liability.

Google has said its workforce is growing faster outside the Bay Area than in it, while Apple is planning to build a campus in Austin, Texas. But the companies also seem intent on adding tens of thousands of employees in and around their headquarters — a prospect that has become more difficult, with cities like Cupertino and Palo Alto now trying to slow the growth of office space.

“We want to create an environment where people have access to good-paying jobs and producing more of them is seen as a positive and not a negative,” Menka Sethi, director of location strategy for Facebook, said after the company announced its affordable-housing investment in October. “Until we solve the housing crisis, I don’t think we are going to get back to that narrative.”