This was a big week for Facebook as employees began moving into the tech giant’s glitzy new 430,000-square-foot building designed by famed architect Frank Gehry. The new West Campus in Menlo Park, California, is now the crown jewel of the Facebook empire, with the building set to support more than 2,800 of the company's more than 9,000 employees worldwide.
One question: Where will all these new workers live and whom will they push out? Silicon Valley has the most expensive housing in the nation, and as Facebook, Google and Apple build campuses in the area, another influx of tech workers will put additional stress on the market, displacing more of what remains of the middle- and low-income families in places like Menlo Park, where Facebook’s new headquarters is located, as well as neighboring East Palo Alto, one of the last havens of affordable housing left in the San Francisco Bay Area.
“Any sort of really intense job creation of this sort without a concomitant increase in housing supply is obviously going to put pressure on an already overburdened housing market,” Daniel Saver, a housing attorney at Community Legal Services in East Palo Alto, said.
Jobs Grow, Housing Doesn't
As job and population growth in Silicon Valley outpaces that of housing unit additions, average rent and median home prices continue to climb, pricing out members of the middle and lower classes. Last year, the median home price in Silicon Valley -- meaning Santa Clara County and San Mateo County, where Facebook lives -- reached $757,585, up $52,801 compared to 2013 and more than $360,000 higher than the median home price throughout the rest of California, according to Joint Venture Silicon Valley (JVSV). It’s also $549,085 higher than the median home price throughout the U.S., according to the National Association of Realtors.
The average rental rate in the region, meanwhile, reached $2,333 per month, increasing 8.7 percent between 2012 and 2013 while median income rose only 3.6 percent, an increase that is “inadequate in offsetting the increased rental rates,” according to JVSV, which provides analysis on the major issues facing the region. Silicon Valley’s average rental rate is also $1,198 per month higher than the national average.
In San Mateo County, which includes Menlo Park and East Palo Alto, the population grew from 704,000 in 2010 to 729,500 in 2013 (3.62 percent), while the number of housing units has increased only 0.56 percent, from 270,000 to 271,500,during the same time period, according to data from the U.S. Census Bureau.
And with Facebook just the first of several new mega campuses coming to the region -- Apple’s “Spaceship” campus will house 13,000 employees, and Google recently revealed plans for a new campus of its own -- fear about a worsening housing crisis is on the rise. Tech giants have figured out how to build self-driving cars and drones that can deliver goods, but they have done little to address the biggest threat to the Bay Area’s continued competitiveness: a shortage of housing that could actually make it harder to attract and retain talent.
"There are many other places that are competing heavily to attract innovation-economy businesses, high-tech firms and startups with much, much lower costs of living, costs of housing and cost of land,” Tim Colen, executive director of the San Francisco Housing Action Coalition, said. “At some point, if we don’t plan, [we're] basically saying, ‘Here are the keys. You take it. You take the new businesses.'"
East Palo Alto
While Menlo Park benefits from the riches of Facebook, now among the world’s most elite tech companies, right across the adjacent Highway 101, posh neighborhoods give way to check-cashing joints and cell phone shops. Menlo Park’s median household income for 2013 came in at $112,262, more than double East Palo Alto’s median household income of $50,142, according to the U.S. Census Bureau.
But that's changing. Four years ago, everyone spoke Spanish at one particular apartment complex in East Palo Alto, but these days, only a handful of Spanish-speaking families remain, replaced instead by young, typically white residents, attorney Saver said.
“Those are stories that we weren’t hearing a couple of years ago but that we are hearing more now,” Saver said. “Are those people Facebook employees? I have no idea, but we are seeing demographic shifts.”
To be clear, no one blames Facebook or other tech companies for the Bay Area’s housing crisis. The problem is the result of laws like Proposition 13, which was approved in 1978 and decreased property taxes by limiting them to 1 percent of a property’s value as well as limiting the growth rate of future property value assessments to no more than 2 percent per year. As a result, Proposition 13 encouraged the growth of office and commercial projects over residential, leading to inadequate housing planning by cities in the region. Additionally, housing construction fell off further during the recession that began in 2007, and now the housing crisis is intensifying as a result of Silicon Valley’s latest tech boom. It gets aggravated each time a new tech company decides to expand.
Don't Blame Tech
“Facebook has really done its side of the bargain. We look at corporations to provide excellent jobs. These are obviously excellent jobs,” Micah Weinberg, president of the Bay Area Council Economic Institute, said. “It’s really the governments and communities that have fallen down on their side of the bargain of building the housing necessary to keep housing affordable for everyone, not just the folks who will be working at Facebook."
Silicon Valley’s tech giants are not the root of the region’s housing crisis, but the high-salaried tech workers they lure every day -- especially when they open mega campuses like Facebook’s -- exacerbate the problem. “The influx of new people coming to the region seeking employment, that’s creating a whole other tidal wave and that might even exponentially increase the housing-stock need,” Jennifer Martinez, executive director of the San Francisco Organizing Project/Peninsula Interfaith Action, said.
Tech companies often reach out to their community neighbors and help in a variety of small ways, such as by donating money to local nonprofits, but those actions are not proportionate to the effects caused by the opening of mega campuses or to the amount of money at the disposal of companies like Facebook, Saver said.
“There are steps the tech companies could take to be better neighbors,” Saver said, suggesting that tech companies could help the situation by supporting campaigns for more housing, rent control and increased eviction protections across the Bay Area. “There’s a lot of us here who recognize the role that the tech companies have in making this problem worse, and we would like to see the tech companies acknowledge the way their operations are having negative consequences for particularly the low-income and middle-income communities where they’re located.”
Ultimately, the problem cannot begin to be fixed until the tech companies, local governments and communities change their attitudes about housing, Colen said. But tech companies haven’t stepped up and taken responsibility for the problem, and local governments are more motivated by California tax laws to build office and commercial space than residences, ignoring planning for housing and hoping instead that neighboring cities will take care of the problem. Meanwhile, Bay Area residents don’t want their neighborhoods to change, as they've enjoyed seeing their property values rise every time the housing problem worsens.
Bay Area residents “live in nice neighborhoods and their feeling is ‘If you put that multi-family building down the street from me, you’ve ruined my neighborhood. I don’t want that. I want my neighborhood to stay the way it is,’” Colen said. “This is a shared cultural value in the Bay Area and many, many towns in California, and we’re terrible at supplying the housing that we need.”