Posted on November 5th, 2019
You know them for your computer, your phone, your TV streaming device, your TV programs (soon), maybe your credit card, and now possibly your mortgage too.
No, it’s not quite the launch of Apple Mortgage some may have hoped for, but computing giant Apple is getting involved in the mortgage business, along with the real estate industry.
Like everyone else, Apple understands there’s a “housing availability and affordability crisis in California,” and instead of sitting on their hands, they’re taking action.
As part of a partnership with California Governor Gavin Newsom, the state of California, and various community-based organizations, Apple will provide $2.5 billion to fund new projects in Silicon Valley and the Bay Area, along with statewide housing support.
Apple Wants to Fix Housing in the Bay Area with $2.5 Billion Dollars
- Funds will be used to build more affordable housing in Northern California
- Apple will also part with land it owns in San Jose worth $300 million
- Company realizes current situation is unsustainable
- Can’t have a city that consists only of highly-paid tech workers
The tech company cites the fact that nearly 30,000 folks left San Francisco in the second quarter of 2019 alone, and notes homeownership in the Bay Area is at a seven-year low.
Apple believes it is their “civic responsibility” to ensure the Bay remains a place where individuals can live, start a family, and contribute to the community.
As such, some $2.5 billion is being ponied up to ease the burden on renters and prospective home buyers in the area.
One billion of that will come via what Apple refers to as a “first-of-its-kind affordable housing fund.”
The fund will act as an open credit line to “the state and others” to build and develop affordable housing for those with “very low- to moderate-income.”
They believe this housing can be built at a rapid pace and for a lower cost, issues that often stop new development in its tracks.
Apple is also giving up some of its own land in San Jose, which it says is worth $300 million or so. This area can be used to develop some of that affordable housing.
Apple Mortgage Assistance for Essential Service Personnel
- $1 billion in funds for financing and down payment assistance
- Geared toward first-time home buyers in essential service positions
- This includes teachers, first responders, veterans, etc.
- Unclear how funds will be deployed, but likely via a state housing agency
Additionally, $1 billion will go toward those looking to purchase a home, who might need some help with financing and/or the down payment.
Apple will work with the state of California to provide the funds, though it’s unclear how the money will be deployed.
What is clear is the funds will be used to boost homeownership for first-time home buyers that are “essential service personnel,” which the company defines as school employees and veterans.
This category can also include the likes of police, firefighters, ambulance drivers, hospital workers, utility workers, and so on.
In other words, Apple fully understands that a city needs all these core services to sustain itself, and without folks staffing those positions, the whole thing will go kaput!
Apple CEO Tim Cook makes this pretty obvious in saying, “Affordable housing means stability and dignity, opportunity and pride. When these things fall out of reach for too many, we know the course we are on is unsustainable, and Apple is committed to being part of the solution.”
It appears the mortgage assistance will be a statewide initiative, though details on the program are pretty scant.
For the record, California already offers down payment assistance and programs geared specifically toward teachers via the California Housing Finance Agency (CalHFA).
But there are income limits and home sales price limits that probably exclude much of the Bay Area, given the sky-high prices seen there.
So this might act as a more up-to-date, practical form of mortgage assistance for those who make a bit more than the Average Joe, but still can’t get a foot in the door.
Lastly, Apple will commit $150 million via a public-private partnership, with non-profits like Housing Trust Silicon Valley, to support new affordable housing projects.
The Housing Trust Silicon Valley provides low-interest second mortgages and down payment assistance, among other things.
Apple says the fund will be comprised of long-term forgivable loans and grants.
Another $50 million will be donated to Destination: Home to combat homelessness in Silicon Valley. Apple’s focus will be on creating systemic change that prevents and ends homelessness.
About the Author: Colin Robertson
Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 13 years.