Cash-strapped London councils are shelling out more than £14m a year to private landlords in “incentives” designed to house the homeless, it has been revealed.
Last year private landlords were paid sweeteners of up to £8,300 each more than 5,700 times in a bid to encourage them to house people who were either homeless or at risk of being homeless, according to an investigation by The Guardian.
Landlords say the compensations are meant to counteract the fact that tenants of this kind are more likely to fall behind on rent. But some landlords also criticised the system, admitting it could be a “waste of money” given that such tenants are more likely to be evicted later on.
The system has been widely criticised. “The payouts are made in addition to rent and have been branded as ludicrous by housing campaigners and intolerable by councils,” says the newspaper.
The justification for such payouts is given as the drop in social housing being built as well as a widening gap between housing benefit and market rents.
Ealing, Hillingdon, Haringey and Barking and Dagenham all paid out more than £1m each last year. Barking, Dagenham and Ealing argue that this costs less money in the long-run than funding the building of social housing.
But Polly Neate, chief executive of the Shelter housing charity, says: “It is ludicrous councils have to resort to handing out cash sweeteners to secure housing for desperate families when there’s a much more sustainable solution: build social housing on an ambitious scale.”
Shelter is currently calling for £3.1m to be spent on a national social housing programme.
While the majority of London’s boroughs paid landlords these incentives to some extent last year, only five completed social housing builds.
The system operates nationwide but research from the homelessness charity Crisis shows that 25% of the UK’s homeless population are in London. Since 2010, homelessness in England has risen by 169%. Funding from central government has dropped by 63%.
In response to this issue, London councils are collaborating to secure housing within London. The not-for-profit Capital Letters will procure housing on behalf of the boroughs with £37.8m in funding from the Ministry of Housing over the course of three years. The system sets out to eliminate competition for housing between boroughs.
While over half a million Capetonians live in informal settlements, the Rondebosch Golf Club pays the City of Cape Town only R1 000 a month for the use of 450 000 square metres of well-situated land.
With a full membership costing R15 750 a year, and fees of about R150 to play a round in off-peak times, the golf course is inaccessible to the vast majority of residents, including those who live around it.
The golf club’s lease with the city is contained in a new report on city-owned land by civil society organisation Ndifuna Ukwazi, which also states that some of the best land in the city “is being used as a dog play park” for the @Frits Pet Hotel and Daycare Centre, described as the largest of its kind in the world.
The report, City Leases: Cape Town’s Failure to Redistribute Land, proposes a “radical new deal” for housing on 24 areas of city-owned land, including golf courses, bowling greens, country clubs, and parking lots. These range across the breadth of the city, from Camps Bay to Strand to Fish Hoek.
Detailed proposals are provided for five of the areas:
Rondebosch Golf Club Buitengracht corridor Harrington Square (parking lot) Green Point Bowling Green Fish Hoek Bowling Green.
The Rondebosch golf course is the largest area. Two-thirds of the golf course is above the 100-year floodline, and Ndifuna Ukwazi calculates the land could offer 183 360 square metres of built space for a mainly residential development that includes communal space, offices, shops, schools, and social amenities.
Depending on the mix of social and market-related housing, about 2 500 residential units could be built there, says the report. These would include single stands and mid- to high-density apartment blocks as a mixture of market-related, social and GAP homes (GAP housing is subsidised by the state for people earning R3 500 to R15 000 per month), set in green space along the Black River.
The authors – Nick Budlender, Julian Sendin and Jared Rossouw – calculated scenarios for Rondebosch golf course in which residential units are built according to a 40% market-related and 60% social housing split (including 20% for GAP housing); a 50-50 split between market and social housing; and a 60-40 split.
The square meterage of individual units in the calculations ranges from 50m² for a market bachelor flat and 30m² bachelor for social housing, while a two-bedroom flat built for the market would be 70m² and one built for social housing would be 45m², which is the average size of an RDP house.
There could also be 116 free-standing homes on 400m² each, and 454 two-bedroom GAP houses of 55m², all set within public and semi-private green space with a promenade along the Black River providing direct pedestrian access to Mowbray.
The 30 separate blocks could each be owned through sectional title schemes and, ideally, would each contain a mix of social and market housing rather than economic differences being divided into separate blocks.
Similar modelling is done for the Harrington Square parking lot, the seven parcels of land which are mostly used as parking lots on lower Buitengracht Street, and for the Green Point Bowling Green, which the report states deputy mayor Ian Neilson has publicly committed for social housing.
For Fish Hoek, which has a density of 884 people per km² while nearby Masiphumelele bursts with a density of more than 40 000 people per km² (2011 data), the proposal is for 171 units built as three-storey walk-ups all dedicated to social housing.
Millions of Kenyans eager for a break from the threat of a life-long rent burden have a reason to be optimistic following the inclusion of affordable housing as one of the governments 4 priorities.
The right to a decent housing by all Kenyans is a constitutional obligation. The 2010 Constitution of Kenya identifies access to adequate housing and to reasonable standards of sanitation as an economic and social right.
President Uhuru Kenyatta’s affordable housing programme seeks to ensure that 1 million Kenyan families become homeowners by 2020. There is already a backlog of two million houses countrywide and that deficit continues to grow by 150,000 units every year.
Annual construction remains a mere 50,000 units against a targeted provision of 250,000 units. Housing costs have risen dramatically due to the exorbitant cost of land, construction materials and labour.
As urban populations increase rapidly, developers continue to target the few upper-middle and high-income families because large housing units generate more profit. Lack of available land for affordable housing has also exacerbated the crisis.
Due to the shortage of affordable housing, many people are forced to live in poor conditions in informal units while overcrowding has led to the degradation of utilities and services including sanitation, water and roads.
The affordable housing plan is therefore timely and necessary. Affordable housing is a complex matter and to increase the chances of success, it is important to draw lessons from the successes and failures of the numerous projects around the globe.
Similar projects that achieved a measure of success adopted joint approaches to financing, regulatory reform, incentives and the use of innovative planning and construction techniques.
Inadequate financing remains the key challenge to housing projects because housing is a capital-intensive sector. The Central Bank of Kenya reported that mortgage uptake has been on the decline with only 28,000 mortgages taken up in 2018.
Kenya Mortgage Refinance Company
The drop was mostly due to high interest rates, tight credit standards and liquidity issues including the long-term 18-month mortgage interest rates.
Establishment of the proposed Kenya Mortgage Refinance Company (KMRC) is anticipated to bridge the financing gap. KMRC will operate as a private sector driven company and provide secure long-term funding to mortgage lenders.
With joint shareholding, the government, pension and insurance firms, banks and venture capitalists can increase the affordability and availability of mortgage loans.
Pension firms for example can upscale the use of pension savings as collateral to provide members with low-interest loans against their retirement savings while at the same time increasing the share value of their social security savings.
It is critical for the government, through national and county government grants, to enroll multiple external financiers who can provide credit rates as low as 5-6 percent.
Private sector players will be able to draw the funds and offer developers and prospective home-owners longer-term mortgages at lower interest rates.
The writer is Group managing director of CPF Group.
South Africa’s Constitution protects everyone’s right to access adequate housing. This principle was spelt out in law when the Court issued a landmark ruling in 2000 that stipulated the most vulnerable people – “those living in extreme conditions of poverty, homelessness or intolerable housing” – should be given priority access to housing.
A new law to effect this was passed in 2001. But, 18 years later, the law hasn’t been implemented. The main reason is that the country’s municipalities still don’t have adequate plans setting out the time frames in which they will provide adequate housing for thousands of people in desperate need.
The most recent data shows that there are about 3.3 million people living in informal settlements. This includes those living in temporary relocation areas.
Tens of thousands of South Africans are living in emergency housing areas known as “temporary relocation areas”. These were established by municipalities as emergency housing for displaced people. But they have proved not to be temporary at all. In fact, some relocation areas have grown in size. This has left both the people who were originally moved into them on a temporary basis, as well as newcomers, in a situation of limbo.
This reveals an epic failure by local, provincial and national governments to deliver social housing, as required by the Constitution. This unresponsiveness of government needs scrutiny by the South African Human Rights Commission, which is constitutionally mandated to promote, protect and monitor the realisation of human rights in the country, including access to housing.
And Parliament, in its oversight capacity, should hold the government to account for its failure to provide housing for the most vulnerable as espoused by the 2000 landmark judgment.
Relocated, and abandoned
One relocation settlement is Blikkiesdorp, a poverty-stricken community 30km east of Cape Town. Blikkiesdorp was established in 2007. It was meant to provide temporary shelter for 650 displaced, indigent people. A decade later, the city still has no definite plans to provide adequate housing for those people. The number of residents has since swelled to 15 000 in about 3 000 dwellings.
A similar situation is also found in Johannesburg, where 118 households were evicted from the Marie Louise informal settlement in 2001 and placed in temporary relocation areas. Although the move was only supposed to be for 18 months, this community is still without adequate homes seven years later. This, despite the courts ordering the City of Johannesburg to provide them adequate basic housing. As with Blikkiesdorp, there are still no precise time-frames for when this community will receive adequate basic housing.
In Durban, the Jadhu Place informal settlement was devastated by a fire in 2008 which displaced 600 households. A decade on, these residents remain in temporary shelters. They don’t know when they will be properly housed.
All these situations violate the Constitutional Court’s 2000 ruling and subsequent legislation. They also go against the policy guidelines the Court provided in 2008 for emergency housing.
Who has failed?
South Africa’s Constitution obliges the government – specifically the Department of Cooperative Governance and Traditional Affairs, which is responsible for municipalities – to provide social housing for indigent South Africans.
Since the landmark Grootboom case, the Housing Development Agency has provided National Policy Guidelines for emergency housing programmes.
Places like Blikkiesdorp were supposed to be a short-term housing solution. But, a decade later, its residents still live in the area. They endure poor basic services like water and sanitation. This is contrary to the 2008 court judgment that provided guidance for dignified temporary housing.
In 2016, the then-mayor of Cape Town demanded that her officials present her, in two weeks, with a plan which would set out time-frames for the rehousing of Blikkiesdorp. Two years later, the city has confirmed there are currently three housing developments for Blikkiesdorp but “poor contractor performance” has caused indefinite delays.
The South African Human Rights Commission is constitutionally mandated to take steps to secure appropriate redress where human rights have been violated – such as is happening in Blikkiesdorp. It confirmed in a report in 2015 it was aware that people relocated to temporary areas end up living there forever.
But it has done nothing to ease the plight of people like those living in Blikkiesdorp.
What needs to happen?
Communities that are relocated to temporary areas are deemed to be “vulnerable” by the Constitutional Court and need to be provided with adequate housing as a matter of priority.
Local government is compelled by policy guidelines which provide clear steps on how this should be done. There are three steps to be followed.
The first is relocate to a temporary area, then maintain the place adequately and, lastly, relocate the affected people to permanent housing. Importantly, the community must be involved in setting the time-frames for the allocation of permanent housing.
Staying indefinitely in a temporary housing area is a relegation of just administration principles as set out in the Promotion of Administrative Justice Act. Actions by government that materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.
The Human Rights Commission and Parliament are the custodians that should ensure the government upholds its constitutional obligations to provide adequate housing.
Blikkiesdorp and other displaced communities have a right to fair administrative action in line with their legitimate expectations. The Human Rights Commission needs to prove its worth and hold the government to account on time-frames to provide adequate housing for these people – and others in a similar situation. This should preferably be complemented by parliamentary oversight.
* Soraya Beukes is Doctor of Public Law and researcher at the University of the Western Cape.
** The views expressed here are not necessarily those of Independent Media.
A government-supported programme to promote home ownership among New Zealanders has missed bold targets.
According to reports, only 10,355 homes have been contracted to be built under the KiwiBuild scheme — or just a tenth of the 100,000 units targeted for completion by 2028.
The Kiwi government has already lowered its first-year goal of completing 1,000 homes to a third of that and scrapped the three-year target of 10,000 units. Fewer than half of the 62 completed units have been sold so far, RNZ reported.
Eligible buyers of KiwiBuild properties are limited to aspiring first homeowner-occupiers who are New Zealand citizens or permanent residents.
However, KiwiBuild is only eight months into a 10-year programme and “thousands more homes” are currently being negotiated, stressed Housing and Urban Development Minister Phil Twyford in a statement.
“The government is beavering away behind the scenes to improve the KiwiBuild programme for both first home buyers and developers, and we’ll have more to say on this soon,” he said.
“[Twyford] promised big, he didn’t quite work out how he was going to do it, and now he’s got a situation where it doesn’t matter how many developers he signs up to build houses for him, he’s got no guarantee people want to buy what he’s building,” Judith Collins, National Party spokesperson for Housing and Urban Development and a vocal critic of the scheme, was quoted as saying.
Meanwhile, Nigel Mckenna from Development Advisory Services chalked up the shortfall in completions to capacity constraints in infrastructure, land, resources, and finance. “ I think the target will, ultimately over time, be revised downwards slightly,” Mckenna said.
Leonie Freeman, chief executive of the Property Council, imputed the deficit in completions to unrealistic targets in the first place. “Some of those initial goals of 1,000 [homes] in 12 months might have been a bit unrealistic,” she said.
“But we need to see it as a great big funnel and as we resolve a lot of the barriers and the blockages, these numbers will scale up.”
Hong Kong will spend around $80 billion to build one of the world’s biggest artificial islands.
Secretary for Development Michael Wong said in a speech Tuesday that around 1,000 hectares of land would be constructed to deal with Hong Kong’s “serious shortage of land supply.”
The project’s total cost will be around 624 billion Hong Kong dollars ($79.5 billion), Wong said.
The new “land” will be formed near the existing island of Lantau, and will provide up to 260,000 residential units, he added. Seventy percent of the new homes will be public housing.
Hong Kong is home to about 7.4 million people. The territory has its own laws and currency, while traditions of transparency, low taxes and light regulation have helped make it a major global financial center.
High demand and short supply have driven property prices to “unaffordable” levels in recent years.
Although Wong said the new island would help Hong Kong “withstand the increasing pressure of the population,” the plans have faced criticism.
Greenpeace responded to Wong’s announcement with a statement urging the government to develop Hong Kong’s former agricultural sites instead, claiming that it would be a more cost effective and environmentally friendly strategy.
Zhu Jiang, senior project director at Greenpeace, said the move was a “retrogression.”
The idea for the development of an artificial island was first floated by Hong Kong leader Carrie Lam, who said in a policy address last year that it would help to ease the housing shortage.
CHARLOTTESVILLE, Va. (WVIR) – By 2040, thousands of people in central Virginia will face a housing crisis unless action is taken now.
That’s the news that came out of an affordable housing talk between statewide advocates and those on the local level on Tuesday, March 19.
That report comes from the Thomas Jefferson Planning District Commission.
While it’s not public yet, the consultant says the area will face a 12,000-unit gap in two decades, which is about a quarter of the size of Charlottesville.
The fallout from 2017’s white supremacy rallies in Charlottesville is having a major impact on the work affordable housing advocates are now doing in the city.
“You have more advocacy now and you have more individuals that weren’t quite aware of the problem,” Yolunda Harrell of the New Hill Development Corporation said.
That’s changed. But how it has changed took center stage at a Housing Virginia meeting at CitySpace on Tuesday.
“Charlottesville has a lot of innovative things that it has focused on around affordable housing,” Erica Sims, the senior adviser for Housing Virginia, said. “It’s really pushing the needle. It’s pretty unique.”
Housing Virginia is a statewide organization focusing on this housing issue.
Members met with city leaders and affordable housing proponents to learn about policy, development, and where the money is coming from to support affordable housing efforts.
“The goal is just to see how do we create a spectrum of housing instead of polarizing housing,” Harrell said.
The Thomas Jefferson Planning District Commission had a consultant look at the region, which includes the city of Charlottesville, along with Albemarle, Greene, Fluvanna, Louisa, and Nelson counties.
The results indicate the area will face a 12,000-unit gap in two decades. “The conversation has moved beyond a debate about whether or not affordable housing is needed,” Sims said.
“It’s part of how we as a community have more equity,” Harrell said. “Everyone needs to have all the choices that they would like to have in terms of where they want to live.”
A Weldon-Cooper Center study also shows white home ownership in Charlottesville is up 21 percent since 2000.
However, black home ownership is down 23 percent in the city during that same time.The city’s attempt to overhaul zoning policy could help change these statistics.
Kenya’s Nairobi City has waived building approval fees for affordable housing projects as a move to attract more investors into the city as it gears to achieve President Uhuru’s Big 4 Agenda on affordable housing.
Nairobi Governor Mike Sonko said the move by his administration will pave way for the county and national government to start construction of housing units to meet the 200,000 set target in 4 years time.
“My cabinet has approved waiving of building fees for all housing projects in Nairobi as our commitment to support affordable housing programme. This applies to projects being undertaken by private investors, county and national government”, said the governor during a groundbreaking ceremony byEdermann Property in Ngara Estate where they seek to construct affordable houses.
The affordable housing Programme aims to construct 500,000 housing units across the country by 2022. Nairobi will launch phase one of the affordable housing programme this year in estates such as New and Old Ngara, Jevanjee, Ngong Road, Pangani and Suna road. Phase two of the project will include Bondeni, Lumumba, Shauri Moyo, Bahati, Ziwani, Gorofani and Jericho. President Uhuru Kenyatta will soon launch the national government affordable housing programme on Park Road Estate, Nairobi.
The governor further commended the move by private investors to construct affordable houses in Nairobi urging them to utilize local skills and local materials in their projects to promote the Kenyan economy.
Sonko added that they have developed Nairobi County Housing Bill in order to manage all county houses and also Nairobi County Staff Housing Bill which will help the county in developing houses for its workers.
Nairobi City County Sessional Paper Number 1 of 2018
Nairobi County Government recently passed Nairobi City County Sessional Paper Number 1 of 2018 as a guiding framework for housing projects in the city conducted by either the government or private investors.
“This policy will help us carry our housing agenda and we will require all developers to comply and follow the guidelines stipulated in the session paper. The policy states how housing units will be shared, how tenants can be relocated and how long projects should take, among others,” noted Governor Sonko.
Lagos has been ranked as the sixth cheapest city in the world to live in, according to the Economist Intelligence Unit survey.
The survey compares more than 400 individual prices across 160 products and services. These include food, drink, clothing, household supplies, and personal care items, home rents, transport, utility bills, private schools, domestic help, and recreational costs
The report said it has some correlation with its sister ranking, the global liveability survey and thereby confirmed Lagos as being less liveable.
Using New York as its standard, Lagos ranked sixth on the list of ten cheapest cities in the world alongside Karachi the capital and most populous city in Pakistan. According to the report, Karachi in Pakistan, Tashkent in Uzbekistan, Almaty in Kazakhstan and Lagos in Nigeria have faced well-documented economic, political, security and infrastructural challenges.
Caracas, Damascus, Tashkent, Almaty, and Bangalore ranked one to five respectively
“After five consecutive years of decline, oil prices bottomed out in 2016 and rebounded in 2017 and 2018, along with other commodity prices. At the very basic level, this will have an impact on prices, especially in markets where basic goods make up the bulk of the shopping basket. But there are further implications” .
The report said Oil prices will continue to weigh on economies that rely heavily on oil revenue. This could mean austerity, economic controls and weak inflation persisting in affected countries, depressing consumer sentiment, and growth.
Here is the full list of the ten cheapest cities in the world:
Everyone knows living in the San Francisco Bay Area isn’t cheap, especially for people like teachers, firefighters, and service-industry workers whose wages haven’t kept up with the skyrocketing cost of housing in one of the nation’s most expensive places to live.
But increasingly, even tech workers — some of the Bay Area’s highest-paid residents — are having a hard time achieving the bedrock of the American Dream: home ownership. These workers average six-figure salaries but increasingly can’t afford to buy a house in San Francisco, where the average home value is around $1.34 million and the median down payment needed was around $250,000 last year. And although there’s been a bit of a slowdown in recent sales, that’s expected to change quickly. A new class of freshly minted tech IPO millionaires are set to “eat San Francisco alive,” as described in a headline of a recent New York Times story.
When Joshua Davis, 28, a software engineer at a machine learning startup who said he makes upward of $100,000 a year, was looking to buy a one-bedroom condo in Oakland, he knew most places would be far above his budget of $500,000. So he considered fixer uppers. He was hoping he could find somewhere that, with a little bit of work, could be a place to settle down — somewhere he could paint the walls any color he wanted.
But he quickly realized that was an unrealistic goal. One place he saw had a rotted mud sill, the structure that provides separation between the house and its foundation. Someone showing the house offered do a “Mickey Mouse job” to repair it for $20,000, but Davis knew that would only be a temporary fix. The house was seriously structurally flawed.
“These were the kinds of places that were affordable,” said Davis, who gave up on the idea of buying a home for now. He’s hoping the market will eventually calm down. In the meantime, he’s paying around $2,300 a month for a one-bedroom apartment in Downtown Oakland.
Davis isn’t alone. Around 70 percent of tech workers for top tech companies living in the Bay Area say they can’t afford to buy a house near where they work, according to a recent study from the workplace chat app Blind, which polled around 3,000 tech workers. Many of the employees surveyed are high-skilled talent — engineers, product managers, and data scientists — who may be able to make rent but can’t afford to buy a home.
The fact that these relatively highly compensated employees like Davis are having problems is a sign that the housing situation in the Bay Area has become an untenable and unsustainable situation for tech’s workforce. And while tech giants like Facebook can afford to pay their employees a median salary of $240,000, other smaller players in the industry are wondering how much higher salaries can go to keep up with the cost of housing, and how much longer tech workers will live in an area they can’t afford.
Companies like Facebook and Google have already started to build housingspecifically for their own employees next to their sprawling mega-campuses. At one point, Facebook offered a $10,000 bonuses to employees who lived near the office to alleviate the strain of housing costs and reduce commute time. Almost every major tech company provides private, free shuttle buses that transport workers from Silicon Valley — where tech campuses like Google and Facebook are located — to relatively more densely populated areas like San Francisco and Oakland.
Last month, Facebook CEO Mark Zuckerberg and his wife, Priscilla Chan, donated $500 million through the Chan Zuckerberg Initiative toward building and preserving affordable housing in the San Francisco Bay Area. While half a billion dollars is a lot, it won’t be enough to single-handedly change the market dynamics of housing in the Bay Area, where for every 4.5 jobs created, only one new home is added, according to the Building Industry Association of the Bay Area. But it’s a sign that tech companies are taking the issue of rising housing costs in their headquarters seriously.
“I do think the large corporations want to work with cities to address the housing issue because they want to expand and they want their employees to have a place to live,” said Lisa Matichak, the mayor of Google’s hometown of Mountain View.
Matichak and other members of the city council are in the process of reviewing competing plans from Google and another company to build more offices on a coveted 30-acre plot of land in the city. One of their chief concerns is making sure the development includes not just office space, but new housing units. In Silicon Valley’s Mountain View, the median home is priced around $1.6 million dollars and the average one-bedroom rents for $2,800, according to online real estate platform Trulia.
And with a new wave of San Francisco tech companies an hour to the north like Uber, Lyft, Slack, and Airbnb expected to go public soon, there will be thousands of new millionaires who may further crowd the housing market, further driving up prices. While there will be a cohort of freshly minted IPO techies, there will be many more who don’t win in the startup lottery.
“I’m guessing with all these IPOs from Lyft and Airbnb and stuff, these prices are only going to go up,” said Davis. “If these prices get crazier and crazier, I don’t know if I’ll able to afford to live out here.”
A housing crisis
Housing prices in the San Francisco Bay Area have skyrocketed at such an extreme rate that the housing shortage and homelessness in the city has been deemed a “human rights violation” by a UN official. In the past seven years, the percentage of households that can afford to purchase a median-priced home in the San Francisco Bay Area has decreased by over 50 percent, according to the California Association of Realtors.
Of course, the people this hits the hardest arepeople working in sectors that aren’t as high paid as tech — like the service industry, teaching, and law enforcement. A recent study found that a whopping 90 percent of workers in Silicon Valley have seen their real wages, meaning their annual salaries adjusted for inflation and rising cost of living expenses, decline over the past 20 years.
That means economic inequality is getting worse in tech’s capital during the same time period that companies like Facebook, Twitter, and Uber have popped up and created billions in value for those lucky enough to be early investors or employee shareholders living in the area.
Some labor advocates have blamed tech for contributing to this economic disparity. A few years ago, protesters hurled rocks at tech worker commuter buses that have become symbols of new money and gentrification. Tech is changing the face of what were once working-class, immigrant neighborhoods in San Francisco like the Mission, where Facebook CEO Mark Zuckerberg owns a home he bought for $10 million in 2013. But now, even many of those tech workers sitting in the shiny charter buses also can’t afford to live in the Mission, or any of the equally expensive Peninsula suburbs along the way to Facebook’s Menlo Park headquarters.
“If the engineers and programmers of the world can’t afford to keep up with rising costs, how in the world are other people ever going to afford to live comfortably here?” said Jeffrey Buchanan, director of public policy at Bay Area-based labor-backed nonprofit, Working Partnerships USA.
The tech worker affordability divide
When it comes to purchasing power to buy property, not all tech workers are created equal.
At major tech companies like Google and Facebook, over 50 percent of workers are contract workers — many of whom make less than their full-time salaried counterparts. There are reports of Google employees who sleep in their vans in the parking lot — taking their showers in the office gym and eating meals in the company kitchen. The engineers doing this are extreme cases; most programmers making six figures may not be able to afford a home, but they can afford a place to rent.
The options are more limited for many others, like the unionized Google janitors who make around $26 an hour including benefits, according to numbers labor union SEIU shared with Bloomberg last July. If those workers are working 40 hours a week, that would put them at an annual income of around $50,000 a year — a little more than half of what the federal Department of Housing and Urban Development considers to be “low income” for a family of four in Google’s home county of Santa Clara.
Because it’s harder for lower-salaried employees to get by in the Bay Area, some tech companies have outsourced large portions of their workforce in functions like content moderation and customer support to places where salaries — and rent — are cheaper, like Phoenix, Arizona.
But these companies can’t outsource everyone they need to keep their San Francisco operations running. They still need facilities workers to keep the lights on, cooks to keep the programmers fed, and janitors to keep the buildings clean at their sprawling campuses.
And aside from the service workers, temps, and contractors at tech companies, the housing crisis is also hard on entrepreneurs and startups.
Davis said the machine learning-backed visual search startup he works for, Zorroa, used to staff most of its programmers remotely, outside California, where their salaries went further. Now that the company has raised a round of VC funding, it can afford to pay more of its workforce enough to live in the Bay Area, Davis said.
By some metrics, California’s entrepreneurship scene is slowing down relative to other startup locales. The Kauffman Foundation, a nonprofit that measures entrepreneurship in the US, found that places like Maine and Washington, DC, had higher indicators of startup activity than California in their latest report. This makes sense given that more people are moving out of the Bay Area than moving in, according to a 2018 report last year from two leading Silicon Valley community organizations. And a survey from the Bay Area City Council in 2018 found that 46 percent of Bay Area residents want to move.
The struggle that these smaller startups go through represents an existential crisis within tech’s core: If Silicon Valley and San Francisco are valuable because they’re a hub for scrappy engineers, what will happen when only the elite of the elite, the post-IPO techies, can afford to buy homes in the city? Sure, younger programmers can squeeze into tinier and more strained living situations, but that becomes harder for people who want to start families.
“The people who move into the San Francisco Bay Area tend to be younger than the people who move out,” said Issi Romem, chief economist at online real estate company Trulia. “By the time people want to settle down, that’s when they hit this wall of affordability.”
There’s also an interesting split in the housing economy. While the prices of homes have gone up astronomically in areas like San Jose in the past several years, rent has been rising at a much slower pace. “It’s a bit of a mystery to economists,” said Jeff Tucker, an analyst on the economic research team at online realty company Zillow.
What this means is that 20- and 30-something tech workers who are relatively well-compensated may be able to keep up with rising rents, but buying a home will remain perpetually out of reach.
These workers are in a much more fortunate position than many of their neighbors, who may be struggling to keep a roof over their heads. But they’re also stuck. For the programmers and product managers who want to own a home but also want to keep pursuing their promising careers in San Francisco, there’s no immediate solution except to wait around in the hope that the housing market will crash.
Can tech solve this crisis?
Some tech leaders are trying to help solve the housing problem.
“I think there’s been this question of, ‘Oh, tech money, is that going to solve our housing crisis?’ And I think it’s taken quite a long time for companies to get serious about what they’re doing,” said Kristy Wang, community planning policy director at a nonprofit research, education, and advocacy organization focused on issues of planning.
While donations like the money from the Chan Zuckerberg Initiative might help, some housing advocates view them as only scratching the surface of a much bigger issue. Matthew Lewis, director of communications at California YIMBY, a pro-development housing advocacy organization, said that while philanthropy efforts help, they ultimately make a “tiny dent” in a housing market that’s as crowded as San Francisco. The YIMBY acronym plays on the well-known NIMBY — for “not in my backyard” — by giving it a “yes” instead.
The solution, as Lewis sees it, is pretty straightforward: “Just build more damn housing.”
In order to do that, developers need city approval, which can be difficult to get based on strict zoning laws that limit density in San Francisco and even more so in Silicon Valley’s suburbs. While some locals argue that these policies preserve neighborhood character, critics argue they are classist: benefitting those who already own property at the expense of others, especially minorities and lower-income residents.
History reveals a dark past to the intentions of many zoning laws in the Bay Area. One of San Francisco’s oldest housing density laws, the Cubic Air Ordinance of 1870, was largely used to criminalize Chinese residents living in boarding houses. Across the bay, similar laws were used in Berkeley to separate more affluent white residents from their black neighbors.
Fast-forward to today and the Bay Area is still revealing deep societal divides in local debates over housing density.
In a city council hearing this past September in Apple’s hometown of Cupertino, one local teenager said he was against high-density affordable housing because it “would mean that we would have uneducated people living in Cupertino.” He and his fellow neighbors were concerned that it would make current residents “uncomfortable.” The city’s mayor dismissed the comments as being made by a “kid” who didn’t know better — but to many, they revealed a candid unveiling of the true feelings of older residents who are anti-development.
But there’s another strain of critique against changing zoning laws. In a city like San Francisco, increased density laws could allow rapid development of multimillion dollar luxury condos that mostly benefit the wealthy, and at least in the short term, displace rent-controlled apartments or other cheaper housing.
In the past, YIMBYs in San Francisco have been accused by some local anti-gentrification activists of being pro-development without enough caution for those locals who could get displaced. Now, Lewis says, YIMBY is working with these groups to advocate for other measures like rent control and affordable housing quotas. The group is also pushing for an amended version of a statewide bill, SB50, that would reform zoning laws to allow for denser construction of housing in areas near major public transit hubs and job centers. It has the support of the Bay Area Rapid Transit’s board of directorsbut faces opposition from some local leaders such as the executive director of the LA County Democratic Party.
While there are certainly many minds — and opinions — debating solutions to the Bay Area’s housing crisis, all this will take a time. Some tech workers say they’re losing patience.
Paul Anzel, 32, is a data scientist who dropped out of his physics PhD program to work in tech in the Bay Area. After years of struggling to save enough to buy a home in the Bay Area — and fighting for more housing development — he finally decided to give up. He, his wife, and their small child moved to San Antonio, Texas, where with the same income they were able to buy a two-bedroom home.
“The Bay Area housing problem isn’t going to be instantly fixed. It’s going to take a long while and a big political will,” said Anzel. “Once I had my kid, I realized there’s no sense in bashing my head against a wall.”
Other tech workers, many of them younger and without families, still feel the pull of the Bay Area, despite the frustrating housing situation.
“There’s a certain amount of energy when you walk around,” said Davis. “All these people who you go around and talk to who have built these great things before you and have the experience to learn from. It’s hard to leave.”