Amazon to Invest $ 1.4b in Affordable Housing Fund

Rising housing costs in tech hubs like Seattle are pushing out longtime residents. Can Amazon's investment help? 

Amazon's money into affordable housing is going to make it a dent.

Amazon is pouring more money into its Housing Equity Fund, a three-year-old initiative aimed at increasing affordable housing options in areas with large Amazon offices. The company announced a $1.4 billion addition to the fund, bringing its total commitment to $3.6 billion. This increase signifies Amazon's growing focus on addressing housing affordability challenges in regions where its presence is significant.

The additional funding targets the creation or preservation of 14,000 affordable homes in Seattle, Arlington, Virginia, and Nashville, Tennessee. These areas have witnessed a surge in housing costs, partly attributed to the influx of high-paying tech jobs brought in by companies like Amazon.

Tech companies and rising housing costs

Amazon's investment reflects a growing trend among tech companies facing criticism for contributing to housing affordability issues in their hub cities. The high salaries offered by these companies attract a large number of employees, pushing up demand for housing and consequently, housing prices. This trend often outpaces wage growth, making it difficult for long-time residents and middle-income earners to compete in the housing market.

Addressing the gap, but is it enough?

While Amazon's investment is a positive step, housing advocates argue that it's not a sufficient solution to the larger affordable housing crisis. They emphasize the need for significant government funding to create a more substantial impact. Critics also point out that a significant portion of the fund  previously went towards loans that generate revenue for Amazon through interest payments.

Focus on the "missing middle"

Amazon targets its investments towards housing for individuals with low-to-moderate incomes, specifically those earning 30% to 80% of a region's median income. The company aims to address the needs of the "missing middle," a demographic that includes teachers, nurses, and other professionals who don't qualify for government subsidies but struggle to afford rent at market prices.

A shift in focus?

An internal Amazon memo leaked last year sheds light on the company's potential motives behind the fund. The memo suggests that Amazon views its philanthropic efforts as a tool for reputation management. Additionally, the fund's shift from Amazon's government and corporate affairs division to its public relations arm raises questions about the initiative's primary goals.

The need for a multi-pronged approach

Experts believe that while tech companies like Amazon can play a role in increasing the supply of affordable housing, their contributions alone are unlikely to solve the problem. Significant government investment and collaboration between various stakeholders are crucial to making a lasting impact on housing affordability.