Roughly 9,200 affordable housing units are being preserved or created in the greater Seattle area thanks to an initiative launched by Microsoft three years ago. An additional 19,000 households have been able to hold on to their housing due to the tech giant’s support of United Way King County.
Microsoft announced its affordable housing initiative in January 2019, and the COVID-19 pandemic that struck a year later has exacerbated an already serious crisis of homelessness and income inequality. The update Thursday from Microsoft highlights areas where progress is being made to ease some of the housing challenges, though much more is needed.
Since the effort started, the Redmond, Wash.-based company boosted its initial investment of $500 million up to $750 million, and it has allocated most of the funds to a variety of programs that support people struggling with housing and to increase the housing inventory.
“What’s important from a big picture standpoint is recognition in public statements and financial commitments from two of our biggest corporations that the lack of housing is a real threat to our region,” said Gregg Colburn, an assistant professor of real estate in the University of Washington’s College of Built Environments, referring to Microsoft and Amazon.
The number of jobs in the Puget Sound region grew 30% from 2011 to 2020 while housing inventory rose 19%, according to Microsoft’s own research. The state has struggled to produce enough housing to match demand, and a booming tech sector has continued driving up housing prices.
It’s a problem seen in communities around the nation, and wealthy tech companies — which have seen their profits soar in recent years — are stepping up to support housing efforts.
A year ago, Amazon committed more than $2 billion to affordable housing initiatives in the regions of Seattle, Nashville, Tenn., and Arlington, Va. The Seattle-based company this week published a blog post about its housing initiatives in Washington state, noting that it has committed more than $344.3 million to create or preserve 2,870 affordable homes.
Facebook and Google have each launched housing programs valued at about $1 billion, while Apple is putting $2.5 billion into addressing California’s housing crisis.
Interactive research shared by Microsoft illustrates the gap in income for teachers, nurses and first responders and the costs of renting or buying a home. A middle school teacher, for example, earning $76,000 a year in 2020 falls far short of the estimated $131,000 income needed to buy a home and hovers just above the cost of rent.
The data show the importance of supporting not only housing for people experiencing homelessness, but those with middle incomes as well.
“If you don’t provide housing further up the housing ladder, you’re not going to be able to solve the issue of homelessness,” said James Young, director of the Washington Center for Real Estate Research at the UW. Working on the supply side “is definitely the way to go,” Young said.
“If you don’t provide housing further up the housing ladder, you’re not going to be able to solve the issue of homelessness.”
One of Microsoft’s initiatives is purchasing bonds used to help finance affordable housing projects. The bonds are structured so that they don’t require higher returns required by traditional bonds. That helps keep housing prices stable even when rental prices rise.
“If the cost of capital is lower, it makes things a lot easier,” said Colburn, when nonprofits and for-profit developers are putting together funding for affordable developments.
Microsoft’s current efforts focus on rentals and do not address the challenges for people trying to buy homes. The company has also lobbied for housing-related policies to facilitate more construction.
Experts applauded Microsoft for partnering with nonprofits and government agencies already operating in the housing space. They said that smaller companies could follow suit and make similar contributions on a more modest scale.
But the reality is that corporate giving won’t be able to solve the affordable housing shortages. Even tech giants like Microsoft, whose current value is $2.3 trillion, and Amazon, which is worth $1.6 trillion, can only provide so much philanthropic support.
Many local officials and national leaders all the way up to President Biden are continuing to push for higher corporate taxes, calling for companies to pay what they call “their fair share.”
Seattle-area companies in the past have fought some tax proposals to help fund homelessness efforts. But Microsoft, Amazon and others more recently backed a payroll tax on high-paying companies that was approved in 2020.