Amazon Boosts Housing Fund to $3.6B for 14K Affordable Units

Key Takeaway

• Amazon commits an additional $1.4 billion to its Housing Equity Fund, bringing the total pledge to $3.6 billion for 14,000 affordable units.
• The fund targets families earning 30%-80% of area median income, focusing on preserving existing housing and creating new units.
• Despite criticisms for not addressing the poorest residents, Amazon's strategy is praised for cost-effectiveness and significant impact on affordable housing.

Amazon's Housing Equity Fund Expansion

Amazon.com Inc. has announced an additional $1.4 billion commitment to its Housing Equity Fund, aimed at supporting affordable housing in the Seattle, Nashville, and Washington metro areas. This new investment brings Amazon’s total housing pledge to $3.6 billion. The funds will be used to create 14,000 affordable units in these regions, adding to the 21,000 units already supported by the company’s previous $2.2 billion investment. The initiative, launched in January 2021, initially aimed to fund 20,000 units over five years.

Amazon’s CEO, Andy Jassy, emphasized the importance of addressing housing challenges, particularly in expensive metro areas. “We know housing is a really big challenge for a lot of people, especially in and around expensive metro areas,” Jassy said during a press conference. “We feel strongly that we can help give back to our communities by helping to preserve and create thousands of affordable homes.”

Focus on Low-to-Moderate Income Families

The Housing Equity Fund targets families earning 30% to 80% of the area’s median income, aiming to assist those who do not qualify for existing subsidies but struggle with rising housing costs. Amazon has focused on preserving existing housing stock and creating new units through grants and below-market-rate loans. According to Alice Shobe, the global director of Amazon Community Impact division, 59% of the units supported so far have been preservation projects. These efforts include donations and loans to nonprofits and local government agencies to purchase buildings and stabilize rents.

Amazon’s approach has been praised for its impact on affordable housing. Jenny Schuetz, a senior fellow at the Brookings Institution, noted that helping nonprofit groups buy existing apartment complexes is more cost-effective than building new housing from scratch. “It can cost $1 million to build a single affordable unit in expensive markets,” Schuetz said, highlighting the efficiency of Amazon’s strategy.

Addressing Criticisms and Challenges

Despite the positive impact, Amazon has faced criticism for not doing enough to address the needs of the poorest residents. Critics argue that the company’s focus on the “missing middle” — professionals like nursing assistants and teachers who don’t qualify for government subsidies but still struggle to pay rent — neglects those on the lower end of the income spectrum. Derek Hyra, a professor at American University, pointed out that projects designed for lower-income individuals require more government subsidies and take longer to complete.

Amazon has responded by maintaining a “mixed portfolio” without losing focus on the missing middle. Most of the units supported by Amazon serve households earning less than 60% of the area median income. Shobe stated, “We’ve made a big difference in both the amount and quality of affordable housing in these three communities.”

Street Views

• Jenny Schuetz, Brookings Institution (Neutral on Amazon's housing efforts):

  "Amazon has helped nonprofit groups buy existing apartment complexes and reserve them for low-income families, which is more affordable than building housing from scratch."

• Sarah Saadian, National Low Income Housing Coalition (Cautiously Optimistic on Amazon's latest pledge):

  "That’s a huge amount of money, and we need every dollar we can get. But the federal government can’t rely on corporate philanthropy to solve this problem."

Management Quotes

• Andy Jassy, CEO of Amazon:

  "We know housing is a really big challenge for a lot of people, especially in and around expensive metro areas. We feel strongly that we can help give back to our communities by helping to preserve and create thousands of affordable homes."