Tech industry’s massive pledge to affordable housing distracts from the real problem

Last week, Apple joined other big tech companies in tossing loads of cash at California’s housing crisis. They outdid Facebook and Google with a whopping pledge of $2.5 billion. The money is split into, among other things, an affordable housing investment fund and construction of affordable units on Apple-owned property. Charity no doubt will help some caught in the crisis, but we can’t lose sight of the real problem: the crushing weight of overregulation and a tight phalanx of political opposition to new housing.

It has become rote practice to blame the booming tech industry for the Bay Area’s housing woes. There’s a risk that tech industry generosity will only encourage this sloppy thinking through a sort of charitable Stockholm Syndrome. In truth, government failure to respond well to growth warrants the brunt of our ire.

If you want housing to be affordable, you need to build more of it. And when housing demand increases because of economic growth, prices surge upward unless supply can keep pace. It isn’t the demand’s fault if supply lags. Indeed, supply should naturally rise to satisfy demand, unless cities suppress it. Take San Francisco, ground zero for California’s housing crisis. Between 2012 and 2018, rent shot up by 29.5 percent, while supply grew by 2.8 percent. The cities receiving San Franciscan refugees built more housing to accommodate this influx than San Francisco built to house its own people. That problem sits squarely on the shoulders of the government.

The problem is two-fold: first, governments cage growth. Urban growth boundaries prevent growth from expanding outward, and single-family zoning, minimum lot sizes and density limits prevent commonsense increases in supply like duplexes in residential areas and taller buildings in urban locations. As these regulatory forces strangle supply, the market must compensate through higher prices.

Second, well-heeled residents pressure local governments to halt development and shirk regulatory reform. The people who stand to benefit from stopping growth are a well-organized group of elites with a lot at stake, while the benefits of growth, though substantial, are spread among everyone. It’s not hard to guess who shows up more often at city hall to crack their knuckles. 

Hence, although San Francisco has a friendlier regulatory environment than many other California cities (a low bar, to be sure), it nonetheless has a notorious housing problem because of a savage, anti-growth aristocracy. Until governments recognize the need to reduce lot sizes, allow old, low-cost living arrangements to become legal again (like homes with shared kitchens or baths), and cut red-tape from the permitting process, no amount of generosity will save us from ourselves. What is needed is not more charity, but greater respect for property rights — allowing local builders to construct homes and apartments that are in high demand. California has already enacted a state law that allows most homeowners on large lots to construct a granny flat adjacent to their homes — that’s a step in the right direction.

None of this is to say that generous gifts such as Apple’s will do nothing. Yet bailing water from a sinking boat doesn’t compare to fixing the leak. And tech industries should be prudent about how their money is used. The unfortunate reality is that Apple’s gift may well founder in the same regulatory shoals that have stymied other developers. While Apple would get fewer brownie points, the money might be better spent lobbying for growth-friendly reform.

Apple and other companies that donate to housing may deserve praise. But it’s like praising Sisyphus for his endurance. At the end of the day, however strong he may be, his boulder ends up at the bottom of the hill again. Until we demand policy reform, these charitable contributions will change little.

Ethan Blevins is an attorney with Pacific Legal Foundation, which litigates nationwide to achieve court victories enforcing the Constitution’s guarantee of individual liberty. Follow him on Twitter @ethanwb.