June 21 2019

Google Invests $1 Billion to Bay Area Housing Epidemic

by racheal

Google office building in Bay Area

Due to the growth of large tech companies over the years in Northern California such as Google, Facebook, and Apple, the prices of nearby real estate have increased rapidly.  The San Francisco Bay Area has the highest housing costs in the nation. Due to this, there has been a large shortage of affordable housing for the low to middle-income neighbors of Google, one of the Bay Area’s largest employers.  

 

Rather than continuing to be a part of the problem, Google’s CEO Sundar Pichai recently announced that they will soon become a major part of the solution by investing $1 billion in land and money to construct new homes in the area. Besides, within the next 10 years, Google plans to allocate $750 million of their land currently zoned for commercial office space to be rezoned for residential housing. This will allow for the development of at least 15,000 new homes in the Bay Area. These homes will be available to families of all income levels, particularly those in the low to the middle-income bracket. 

 

This is just the beginning of Google’s plans to redeem themselves in the housing epidemic that they have seemingly been a large part of over the years. They have also committed to generating a $250 million investment fund that will offer incentives to allow home builders to develop a minimum of 5,000 affordable housing units in the market. Google also has plans of providing $50 million in grants through Google.org to assist in relieving the issues of homelessness and displacement in the neighboring areas.

 

Other large tech companies are following suit with nursing the plummeting real estate market back to health. The chief executive of Facebook, Mark Zuckerberg, announced he will raise $500 million to expand affordable housing in the Bay Area. 

 

Although it may seem that the real estate market will be on its way to a road of recovery with several plans in the works thanks to Google and its other tech counterparts, there may be a few discrepancies amidst this good news.

 

Google is not simply giving away $1 billion as many of the headlines make it appear. This is an investment. Google is leasing its land to developers who will in turn rent and sell the units that are to be built and will profit from this transaction in a major way. 

 

Google owns property in Mountain View, California and part of that $1 billion investment will also go toward building up to 9,850 units at this location as well. Only 20 percent of the housing to be built in Mountain View will be deemed affordable housing. 

 

Logistically, Google does not have enough land to develop 15,000 traditional single-family homes. This means that the construction of multiple housing units such as apartments and condos should be expected instead. 

 

However the tech giant’s plans of operation seem to unfold, Google will come into good graces with its neighboring communities over the next 10 years as the burden of the real estate market in the Bay Area ultimately lessons.

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