Housing Policy

Bernie Sanders Blames Apple for Silicon Valley's Government-Created Housing Crisis

Development restrictions and NIMBYism, not tech sector success, explain Silicon Valley's housing costs.

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Apple is the latest tech company to announce its own plan for easing Silicon Valley's housing affordability crisis, and Sen. Bernie Sanders (I–Vt.) is not happy about it.

On Monday, the Cupertino-headquartered tech giant announced that it would be investing $2.5 billion into housing and homelessness initiatives, including money for affordable housing projects, mortgage assistance, and spending on the homeless.

"Before the world knew the name Silicon Valley, Apple called this region home," said Apple CEO Tim Cook in a press release. "We feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family, and contribute to the community."

The company says it will create two $1 billion funds, one to finance public housing development, the other to assist first-time homebuyers.

In addition, Apple says that it will make $300 million of company-owned land in San Jose available for affordable housing. It will also launch a new $150 million affordable housing fund in the Bay Area. Another $50 million will be invested in a local homeless group in Santa Clara County.

But for the socialist senator and Democratic presidential candidate, Apple's sense of "civic responsibility" is a band-aid for a wound the company inflicted.

"Apple's announcement that it is entering the real estate lending business is an effort to distract from the fact that it has helped create California's housing crisis," Sanders said in a press release. "We cannot rely on corporate tax evaders to solve California's housing crisis."

In lieu of corporate philanthropy, Sanders has proposed a "housing for all" plan that would do many of the same things Apple is promising, just more so.

The senator would spend close to $2 trillion on building or rehabilitating low-income housing. His plan would also spend billions more on aid to first-time homebuyers and homeless services. On the regulatory side, Sanders' plan would cap rental price increases at 3 percent or 1.5 times the rate of inflation (whichever is higher), and enact new federal restrictions on evictions and mortgage lending.

The charge that Apple, and the tech industry more broadly, is responsible for California's housing affordability problems is not a view unique to Sanders. Indeed, it's a common refrain that an influx of tech jobs and tech money has made cities more expensive and less livable.

Everyone from Vice to The Verge has written about how Silicon Valley companies are attempting to solve a housing crisis they "helped create." A Los Angeles Times poll from last year found 15 percent of respondents blamed high housing costs on the tech industry; 13 percent blamed a lack of housing stock.

Both Seattle and San Francisco have tried to fund affordable housing and homeless programs with taxes targeted at high-grossing tech companies.

Indeed, the fact that not just Apple, but also Microsoft, Facebook, and Google have all proposed affordable housing initiatives shows how sensitive tech companies are to this charge.

But to blame the tech industry for high housing costs is to confuse a failure of government policy for capitalistic excess. It ignores metros that have managed to add jobs while staying affordable. Meanwhile, the misguided policies that make California such an expensive place to live would also prevent Sanders' chosen housing policy fixes from working.

On a superficial level, it is, of course, true that if you add jobs and people to an area faster than you add housing units, prices are going to go up. This is exactly what's happened in the tech-dominated areas of Silicon Valley and San Francisco.

According to a report from the website Apartment List, San Francisco has added 5.6 jobs for every housing permit it issued between 2008 and 2018. San Mateo County, just south of the city, had the same jobs-to-housing ratio over that time period. Santa Clara County, where Apple is headquartered, added 3.3 jobs for every housing permit in the last decade.

Because the Apartment List study looks at permits issued, not units built, it probably overstates how much housing construction has happened. One study of San Mateo County, for instance, found that the city had built only one unit of housing for every 20 jobs it had added.

Unsurprisingly, Bay Area rents and home prices are among the highest in the nation. Four of the top five counties ranked by median home price are in the Bay Area, according to the National Association of Realtors. The top 16 most expensive cities in which to rent a one-bedroom apartment are all in the San Francisco and Silicon Valley area.

The failure to build enough housing to accommodate new workers and the higher prices that come with that shortage are both largely the product of overregulation. San Francisco's zoning rules ban the construction of denser apartment buildings in most of the city, preventing it from growing up to accommodate new jobs and residents. Places like San Mateo and Santa Clara County combine these restrictions on multi-family housing with urban growth boundaries that prevent them from growing out.

All these places suffer from organized NIMBY opposition to new housing, whether it comes from homeowners or anti-gentrification activists; as well as a planning process that gives these NIMBYs ample opportunity to slow, stop, or shrink new housing developments.

Areas of the country that don't have such insane restrictions on development have managed to both grow and stay affordable.

According to Bureau of Labor Statistics data, lightly-regulated Houston has seen its civilian labor force grow by 20 percent in the last decade, compared to the San Francisco metro area's 16 percent.  Some 21 Fortune 500 companies have their headquarters in Houston. What's more, for every job the Houston metro area has added, it's also permitted another unit of housing. As a result, the average rent for a one-bedroom apartment is $841, and home prices are below the national average.

To put it simply, high home prices and rents result from housing demand exceeding supply. Supply is low in the Bay Area because the bureaucrats and elected officials who run those cities kowtow both to property owners who don't want more housing and social justice activists who want more housing but only if no one makes any money off it. Together, these three groups are screwing over people who need an affordable place to live and the developers who want to build new homes.

One solution in California and elsewhere is to follow the Houston model of allowing private developers to build more housing. There's precious little of that in Sanders' housing plan, however. His 3 percent cap on rental price increases would effectively kill off any private investment in multifamily developments.

"Investors would move their money to other sectors of real estate. Developers would decide there are better things to build than apartments," Doug Bibby, president and CEO of the National Multifamily Housing Council, told CityLab in reference a 3 percent rent increase cap proposed by Rep. Alexandria Ocasio-Cortez (D–N.Y.).

Building massive amounts of new public housing units, as Sanders has proposed, could theoretically fill the gap. This PHIMBY (Public housing in my backyard) approach to the housing crisis, however, requires not only reforming zoning laws and overcoming NIMBYism, but also raising enough tax revenue to pay for all this new public housing.

Touro Law Center professor Michael Lewyn notes that this is unrealistic, "not just because of public taxophobia but also because the same progressives who favor public spending on subsidized housing also favor public spending on a wide variety of other priorities."

There's also reason to doubt Sanders' commitment to abolish the necessary zoning regulations that would allow for a public housing construction blitz too. Mother Jones has deftly reported on Sanders' long history of demonizing developers and supporting local anti-development candidates, including some in San Francisco.

Sanders' criticism of Apple's housing initiative is not just misplaced, it's also hypocritical. Rather than a regime of price controls, tax increases, and government spending, fixing America's housing affordability problems requires letting free markets actually function.

NEXT: Regulators on Both the Right and Left Are Wrong About Big Tech

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  1. Ug. Go away, commie grandpa. Didn’t he just have a heart attack? Time to pack it in.

    1. Do you feel the Bern of a heart attack?

  2. Sanders’s “Government-for-All” plans means he has to oppose any private sector solutions as a matter of course

    1. Boy Scouts can’t be helping old ladies across the street! That’s the gub’ment’s job!!!

      1. Scouts (no longer Boy Scouts) no longer help little old ladies across the street because they are taught that would be ageist, sexist, and presumptive of the persons perceived gender. Not to mention that would require being out of mommy’s sight and on a public street.

    2. The Reason video on Sanders showed him saying that he does not believe in charity. He wants all relief programs should be through government.

      1. He wants all relief programs should be through government.

      2. Separation of church and state.
        If churches have to stay away from elections then gov’t should stay away from charity.

        1. Government does stay away from charity. Taking tax money and redistributing it does not involve choice. Nothing charitable about that.

  3. In addition, Apple says that it will make $300 million of company-owned land in San Jose available for affordable housing.

    Unfortunately that comes out to an acre and a half.

    1. Build upward, my man. What could go wrong?

      1. The Shadow knows – – – – – – –

  4. Touro Law Center professor Michael Lewyn notes that this is unrealistic, “not just because of public taxophobia but also because the same progressives who favor public spending on subsidized housing also favor public spending on a wide variety of other priorities.”

    I really dislike this trend of adding “-phobia” to the end of words to indicate that someone doesn’t like something.

    A phobia is supposed to be an irrational fear of something. Its not irrational to fear the government taking a shit ton of stuff that you earned. Its a legitimate fear driven by the fact that the government already takes our shit during every purchase, every pay period, every tax season, etc.

    I understand that language is flexible and ever-changing, but this irks me because “phobia” still has a negative connotation to it that insinuates that whoever feels the phobia has no reason to fear the thing in question.. that they’re crazy or behind the times to feel such a fear.

    1. ^This! Fear of taxes is totally rational.

    2. That is why it is a propaganda technique.

    3. Look at TripK2 having Phobiaphobia.

      1. Not gonna lie, I chuckled.

    4. “I really dislike this trend of adding “-phobia” to the end of words to indicate that someone doesn’t like something.”

      I freely admit to being murderphobic; I don’t want to be murdered.

  5. Bernie Sanders job is to keep the more radical elements of the left firmly on the Democrat plantation. That’s been his whole purpose in life for the past couple of presidential elections at least.

    1. ^ This. It’s the reason he was the only other candidate allowed to run in 2016. The endgame was that Robert Reich commercial saying “thanks, Genuine Left, for that reality check on our priorities! Now it’s time for you to come back into the fold and vote for Hillary!”

      1. Really effective; they went and voted for Trump.

  6. All employers need to provide their employees with a living wage, but when they do that they get blamed for causing a housing crisis.

    It’s almost like there’s absolutely nothing corporations could do to make these people happy other than cease to exist.

    1. No, they can’t cease to exist, or else who would we blame?

      The basic fact is that no local politician gets anywhere on an “I’m going to tank property values” platform.

      But make no mistake, “make housing more affordable” = “tanking property values.” Two different ways of saying the same thing. The one is a political imperative, the other is political suicide.

      Such is the nature of politics, and is why successful politicians are lying slime-bags. It is the art of promising people things they only think they want.

      1. We really need to get away from the idea that owning a home is the average man’s biggest “investment” during their lives. The land is an investment. The structure sitting on top of it is a consumer good. Real estate is tricky, but since our government has decided that this should be the primary wealth-generating vehicle for the average American family, they’ll continue to prop up property values by restricting supply, incentivizing demand and empowering petty tyrants that can tell people what to do with their property.

        This will ensure that this crisis is never, ever solved.

        1. Give it a few more massive crashes…

  7. It’s always so strange when these clowns think government can pay for everything that private industry and private people pay for now, yet somehow do it cheaper and with less disruption and less injustice. It’s as if they simply have no concept of where taxes come from.

    1. For the progressive, the money is redeemed when it’s justly taken from the people and put to collective use. It’s sinful money until it’s collected by the state.

  8. “The company says it will create two $1 billion funds, one to finance public housing development, the other to assist first-time homebuyers.”
    I suspect the $2 trillion dollars would be better spent getting Republicans elected.
    Or hiring the homeless at $15.00/hr to do 133,333,333,333 hours worth of pressure washing the sidewalks.

      1. Damn, we’ll never get anything done with only a hundred million hours of homeless pressure washing.

      2. Right.
        I guess I just got too used to plans that deal in trillions.

        (and I am just too damn lazy to use the edit function)

    1. Or just fly around in a helicopter tossing out handfuls of $100s.
      Seems about as good as any other public stimulus plan.

  9. not only will Apple own your home entertainment and phone they will now own your home. There was a time when Americans defected from company towns because of how evil it was and now they are going back to them. Fools eveyone of them

    1. People will stand in line to buy an iHouse, despite thew fact that none of the appliances can be replaced and you have to buy special adapters to plug anything in to the electrical outlets

      1. That and the ToS to live there will change daily.

        1. People will get deplatformed out of their house for having spoken a disfavored opinion in front of the siri mic on their kitchen sink. Reason will rush to Apple’s defense, quoted as saying “Apple is a private company, they can throw people out of their homes for having bigoted opinions about the next Star Wars if they want to.”

          1. Well, read your damn HOA agreement. Or better yet, stay the hell away from any housing that requires you agree to such a thing. I don’t know why anyone wants to live that way.

            1. I was looking for a house one time, and told the agent not to show me any houses in an HOA neighborhood.
              I never heard from her again.

            2. You must be one of those billionaires who can live in the world without compromise as he pleases.

              In the real world, people move into homes with CC&Rs because that’s the best compromise they can make given their budget constraints, their job, their family, and their commute time. For the same reason, they move into neighborhoods and towns whose laws they may disagree with.

              And let’s not forget that in a libertarian society, all housing would necessarily have to be covered by multiple HOA-like agreements.

              1. If more people said “hell no” to the more invasive HOA stuff, then the situation would change. Right now it seems like it’s mostly for people who like being all into their neighbors’ business.
                Nope, I just drive a little further to work. And we don’t live in a libertarian society.

  10. Christ, what an asshat.

  11. “The failure to build enough housing to accommodate new workers and the higher prices that come with that shortage are both largely the product of overregulation.”

    No. Largely the product of overpopulation.

    Moreover, Houston has a completely different topology – flat as a pancake for a hundred miles.

    1. No. Tokyo metro has as many people as California, is hemmed in by mountains and the ocean, and still has reasonably affordable housing.

  12. If an article is going to explain the culprits behind a “housing affordability crisis” perhaps it would make sense to let us all in on what is the “correct” price of housing. The problem is market restrictions on housing, full stop. Every market for every product has prices that SOME people can’t afford or won’t pay. That doesn’t equal an affordability crisis. It’s the market allocating scarce resources.

    1. Agreed.
      While the government distortions drive the costs up, for all the ‘overpriced’ houses in San Francisco, every last one of them sells.

  13. What a crock. Letting MORE over-development happen is just going to make a nasty thing worse. Get rid of about 2/3 of CA’s populations, and you’d have no “housing crisis” at all.

  14. This article has some truth in it but is oversimplified absolutism. Absolutely regulations, zoning, building codes, permitting, environmental impact studies and NIMBY assholes are jacking up prices in the bay area considerably. They do completely neglect cheap money and crazy low interest rates caused by an incompetent, corrupt and nutless federal reserve artificially jacking up housing prices (and this is happening everywhere including Houston and not just in the bay area).
    But, the bay area also has plenty of some of the highest paying jobs in the country which makes the area more in demand and thus has higher priced housing. It’s also in a densely packed valley with little available land left without going way way into the sticks, so supply is also low causing prices to rise. If you took the government and NIMBY jackasses away, the bay area would still be pricey, just not as bad.

    1. The problem here is ENTIRELY the fault of the hostility of local governments to new construction, and the zoning racket.

      -jcr

  15. Bernie’s still a brain-dead commie, film at 11.

    -jcr

  16. Apple and Google are (partially) responsible for the housing crisis: by creating a large class of wealthy, ignorant, pampered progressives who adopt public policies that lead to housing problems, homelessness, and other problems.

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