The median home value in the Seattle area is now over $720,000, almost double from eight years ago. For companies like Redmond, Washington-based Microsoft, the price of housing is hardly sustainable for many of its employees—not to mention the teachers, first responders and civil servants who provide many services on which Microsoft’s workers rely.
Microsoft’s affordable housing strategy rests on three pillars: providing capital for middle-income housing, supporting low-income housing projects, and tackling homelessness through various grants.
To some critics, this promise may be akin to entering an Uzi fight with a pen knife. Just consider how little land is available in the Seattle region, the surging number of good-paying jobs in the Pacific Northwest, and the area’s competitive housing market.
But mind you, this is a company that has been around a long time, and when one thinks how drastically the tech sector has changed over a generation, it is impressive Microsoft has not only survived but thrived—current estimates suggest its valuation is around $800 billion.
It is also important to take a step back and look at the scale of Microsoft’s initiative. The company says it will spend half a billion dollars on affordable housing in an area home to 3.7 million people. Compare that to the U.S. Department of Housing and Urban Development’s 2016 budget (the final year of the Barack Obama administration) for various housing programs, which totaled just under $27 billion in 2016—for a country of 325 million people.
Crunch the numbers, and Microsoft is spending approximately 60 percent more per-capita than our federal government on an intractable problem with no easy solution. And Microsoft’s action is different from supporting a tax or change in policy. This is Microsoft’s money, largess that would have been unthinkable a decade ago.
Microsoft’s plan should spur other companies, especially those in the technology sector, to take action. Shift your attention 800 miles south, and there’s another region long known for its absurd housing prices and stubborn homelessness problem.
California’s median home price was $88,700 in 1970. Almost a half-century later, that price has skyrocketed to almost $550,000. The median home value in Apple’s home base, Cupertino, has approached almost $2.3 million, and quite disturbingly, the cost of living in the wider San Francisco Bay Area has reached the point at which families making $117,000 are now classified as low income.
For those who live in other areas of the country and are feeling smug about the housing woes along the Pacific and Atlantic coasts, be aware that many cities, from Austin to Nashville, are now facing affordable housing struggles as the costs of home ownership and rent continue to climb.
If you have faith that the markets on their own will undergo a course correction, your belief should be tested by the reality that such a leveling off in housing prices likely would have occurred by now.
And for those who say the government should step in, do not count on that happening any time soon—and that is even before the federal government lurches toward its fourth week of a shutdown. Although the federal tax code has modified the amount of mortgage interest that can be deducted from homeowners’ income taxes, the argument remains that federal tax policy still favors homeowners who are relatively well-off. Quite frankly, there is no political appetite to change that discrepancy in the near term.
Microsoft’s salvo in taking on the Seattle area’s housing crisis is couched in numbers, talk about partnering with local governments and community building. But the bottom line is that the tech giant has joined the brands taking stands movement—and is demonstrating leadership by addressing a problem that governments are either unable or unwilling to solve.
So now, we want to ask other technology companies, who’s next in line? After all, the noise over housing costs is not going away—particularly not with the effects that Amazon’s decision to open new bases in Northern Virginia and Queens have already left on those communities.
Image credit: Wonderlane/Flickr
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.