When I read about Facebook doing the same thing, my first reaction was the same as it is now....there's no way a small investment of $2.5 billion will do anything when it costs over $2 million to buy a house reasonably close to work in SF/SV.

As others have pointed out, California has a different property tax system that encourages people to hang onto their houses. However, my opinion is that people are hanging onto their houses mainly because that's all they have for retirement. I'm near NYC and we have a similar (but less insane) housing market...the closer you get to NYC, the more you pay for a crappier house. People are paying $700K+ for cheap 1950s 800 sq. ft. Levitt houses on practically no land. It's not $2M, but it's crazy. I feel people are hanging onto their houses for dear life so they can use them as a retirement fund and move to North Carolina or Florida since they don't have a 401K or other safety net beyond Social Security. The generation retiring now is the last one to have pensions and other guaranteed sources of income...everyone else is at the mercy of the stock market, their own plans (or failure to plan) and other forces. When everyone dumps their houses onto the market, the prices will drop and unfortunately I don't think it's going to be an orderly selloff. Sure, you can sell your $800K house and buy a $150K mansion in North Carolina, but only if people are willing to give you that...and they probably won't be if they have their pick of thousands of other houses.

$2.5 billion will buy a little over 1200 SV houses at $2M each...that's not going to change anything. The only other thing I can think of is company-provided housing which would be a privacy/indentured servitude nightmare. Imagine getting fired and having your belongings dumped out at the front gate.