Architectural rendering of Facebook’s proposed Willow Campus is seen in Menlo Park, California, U.S. in this undated photo obtained by Reuters July 7, 2017. Facebook/Handout via REUTERS

By David Ingram

SAN FRANCISCO (Reuters) - The shortage of housing in California's Silicon Valley has gotten so severe that Facebook Inc on Friday proposed taking homebuilding into its own hands for the first time with a plan to construct 1,500 units near its headquarters.

The growth of Facebook, Alphabet Inc's Google and other tech companies has strained neighbourhoods in the San Francisco Bay area that were not prepared for an influx of tens of thousands of workers during the past decade. Home prices and commute times have risen.

Tech companies have responded with measures such as internet-equipped buses for employees with long commutes. Facebook has offered at least $10,000 in incentives to workers who move closer to its offices.

Those steps, though, have not reduced complaints that tech companies are making communities unaffordable, and they have mostly failed to address the area's housing shortage.

"The problem with Silicon Valley is you don't have enough supply to keep up with the demand," said Sam Khater, deputy chief economist at real estate research firm CoreLogic.

With Facebook's construction plan, the company said it wanted to invest in Menlo Park, the city some 45 miles (72 km) south of San Francisco where it moved in 2011.

The company said it wants to build a "village" that will also have 1.75 million square feet of office space and 125,000 square feet of retail space.

"Part of our vision is to create a neighbourhood centre that provides long-needed community services," John Tenanes, Facebook's vice president for global facilities, said in a statement.

The 1,500 Facebook housing units would be open to anyone, not just employees, and 15 percent of them would be offered at below market rates, the company said.

Facebook said it expects the review process to take two years.

Alphabet has taken a smaller step, buying 300 modular apartment units for short-term employee housing, the Wall Street Journal reported last month.

Menlo Park Mayor Kirsten Keith said in an interview that there were concerns about whether the Facebook plan would increase traffic, a subject the city's planning department would study.

She said, though, that Facebook's plan fits with the city's own long-term plan for development, and that the city was excited about the additional housing.

Facebook's Tenanes said the density of the proposed development could also entice spending on transit projects.

"The region's failure to continue to invest in our transportation infrastructure alongside growth has led to congestion and delay," he said.

(Reporting by David Ingram; Editing by Cynthia Osterman)