Under the plan, 15% of the units would be reserved for low- or middle-income families, and the company is offering numerous other benefits for the city, including millions of dollars to study and improve transportation. It is unclear whether Facebook or a third party would develop the buildings, which are located on a site that is currently a set of industrial buildings owned by Facebook. The timing, too, is uncertain.

Other tech giants are likely watching closely. Google Inc. has voiced support for allowing housing on numerous sites it owns in its hometown of Mountain View, Calif., though it has no detailed plans for those sites.

By all accounts, the imbalance of extraordinary job creation and severe housing shortages in Silicon Valley and San Francisco to the north is only poised to grow in coming years.

The area—San Francisco, San Mateo County and Santa Clara County—added more than 380,000 jobs between 2010 and 2015, according to the California Employment Development Department, dramatically outpacing the production of new housing. Builders got permits for just 58,000 units in the same period, according to the U.S. Census Bureau.

Rents and home prices have soared as a result. Many workers have to commute from distant exurbs, while at least one community is pondering subsidizing housing for teachers.

The lack of housing is driven partly by incentives. Cities tend to favor commercial development over residential because offices generate more tax revenue than apartments, and don’t require additional spending on costly services like schools.

But the region also lacks the infrastructure to rapidly increase its population—roads are already clogged and mass transit networks are limited. Further complicating matters is a strong not-in-my-backyard sentiment among homeowners who don’t want their small towns to rapidly transform into busy cities.

Facebook’s intended expansion of its headquarters has stoked controversy despite the housing push. The plans call for a 1.1 million-square-foot expansion of its office complex, drawing ire from the neighboring city of East Palo Alto as well as a coalition of residents who say they are concerned the influx of so many jobs without more housing will only exacerbate problems faced today.