Facebook doesn’t shy away from a problem, even one as big as California’s affordable housing crisis.
The social media giant recently announced that it would begin combatting its home state’s massive lack of affordable housing squarely in the most expensive metro area in the country, San Jose, where the median home price has hovered near $1 million for nearly a year. Facebook announced that it would partner with Envision Transform Build-East Palo Alto (ETC) to create affordable housing opportunities, job education and training programs, and expanded legal relief for tenants.
The move is likely motivated at least in part by a need to preserve Facebook’s massive local employee presence in the area. The company, which employs more than 17,000 individuals worldwide, has nearly 12,000 of that population working on-site on its main campus at Menlo Park.
Given that Facebook is expanding that campus, those in charge clearly do not wish to take the route being taken by many other companies and relocate to more affordable areas of the country. Instead, Facebook hopes that it will be able to create affordable housing opportunities on its own via the partnership and that other companies will join the partnership once it becomes evident that the strategy is working.
It is extremely arduous for developers and builders to obtain the necessary permits and resources to build in California, thanks in part to what some analysts describe as overcrowding (many dispute this) and to water-related issues, which make it difficult to get permission to build housing developments that might tax already-strained local aquatic resources by bringing in new, large populations. Additionally, the luxury market in the state is so strong that most builders would simply prefer to build “median” $1 million homes or ultra-luxury homes instead of affordable housing.
With plenty of well-paid IT employees entering the area constantly, this strategy is working well for the builders and buyers who can afford to pay, but not for the vast majority of individuals working in the Silicon Valley area and throughout the state. According to the California Department of Finance and the Metropolitan Transportation Commission (MTC), there have been more than half a million jobs created and filled in California since 2010, but only about 55,000 new housing units during that same time period.
About the Author
Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at editor@bryanellis.com or visit www.investing.bryanellis.com.
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