Apple commits $2.5b to California housing

Apple Inc pledged a $2.5 billion financial package on Monday to deal with the housing crisis in California, which has been intensified by the Silicon Valley tech boom.

Apple became the latest tech giant to help fund affordable housing for low-income workers and the homeless in the San Francisco Bay Area. Earlier this year, Facebook and Google each pledged $1 billion in California. In the Seattle, Washington area, Microsoft announced it would dedicate $500 million to affordable housing.

Apple's initiative, in partnership with Governor Gavin Newsom, the state and community-based organizations, includes $1 billion for an affordable housing investment fund, $1 billion in mortgage assistance for first-time home buyers, $300 million worth of land owned by Apple for new development in San Jose and $200 million for low-income housing in the Bay Area, according to the company. The plan will be implemented over the next two years.

"Affordable housing means stability and dignity, opportunity and pride," Apple CEO Tim Cook said in a news release. "When these things fall out of reach for too many, we know the course we are on is unsustainable, and Apple is committed to being part of the solution."

"This unparalleled financial commitment to affordable housing, and the innovative strategies at the heart of this initiative, are proof that Apple is serious about solving this issue. I hope other companies follow their lead," Newsom said.

Approximately 45 percent of California residents rent their homes, and among them, the average hourly wage is $22.49, according to data from the National Low-Income Housing Coalition. However, a renter must earn $34.69 per hour to afford market rent for a two-bedroom home.

"Community members like teachers, firefighters, first responders and service workers are increasingly having to make the difficult choice to leave behind the community they have long called home," according to a statement from Apple. "Nearly 30,000 people left San Francisco between April and June of this year, and homeownership in the Bay Area is at a seven-year low."

While tech companies big and small produced millionaires and billionaires in the area, they also helped drive up housing prices, marginalizing communities and increasing homelessness.

"At its core, homelessness is caused by the lack of affordable housing. In our community, there are only 30 affordable and available apartments for every 100 extremely low-income households," said Jennifer Loving, CEO of Destination: HOME, a non-profit organization in Silicon Valley that partnered with Apple on the initiative.

Loving said her organization will use the $50 million fund from Apple to produce more permanently affordable housing and prevent families from becoming homeless.

"Apple's contribution serves a terrific example of how Silicon Valley can work in partnership with the public and non-profit sectors to address the huge challenge. And I hope that others will follow their lead in the weeks and months ahead," she said.

As tech companies in Silicon Valley expanded, their workforces grew, creating an imbalance in supply and demand for housing. Since 2005, only 308 housing units have been added for every 1,000 new residents in California, according to data from the McKinsey Global Institute. In the Bay Area, 676,000 have been added over the past eight years, compared with 176,000 additional housing units.

The National Low-Income Housing Coalition noted in June that Bay Area counties accounted for five of the six most expensive places to live in the United States.

In Silicon Valley's Mountain View, where numerous tech companies are headquartered, the median home price is around $1.6 million, and a one-bedroom costs $2,800 to rent, according to online real estate platform Trulia.

"The sky-high cost of housing — both for homeowners and renters — is the defining quality-of-life concern for millions of families across this state, one that can only be fixed by building more housing. This partnership with Apple will allow the state of California to do just that," said Newsom.