Silicon Valley's Apartment Construction Stalls as Costs Soar
Construction of apartment buildings in Silicon Valley has come to a halt due to a combination of factors, including higher interest rates, increased financing costs, material and labor expenses, and a decrease in demand for market-rate apartments. The slowdown threatens the Bay Area's goal of building over 441,000 market-rate and affordable homes in the next eight years. Chronic failure to build enough affordable housing is displacing people and disproportionately affecting the poor and marginalized communities. The economic challenges have forced developers to pause construction projects, and the region's population has dropped by around 3%. The recent failures of local banks and negative publicity have made it harder to secure construction loans. Steep material and labor costs, along with oversubscribed public subsidies, further hinder affordable housing development. Efforts are underway to bring a $20 billion Bay Area affordable housing bond and a $10 billion statewide housing bond measure to the ballot.
