New Study Finds Bay Area Housing "Persistently and Pervasively" Unaffordable for Working Families
ULI Report Predicts Extreme Housing Shortages of
Nearly 30,000 Units by 2025 and an Even Greater Number of Families Being
“Priced Out” of Housing Unless Serious Policy Changes Occur
SAN
FRANCISCO (February 18, 2010)—Housing in the San Francisco Bay Area today
remains unaffordable to a large portion of the region’s workforce and the
problem is expected to continue to grow with severe housing shortages by 2025,
according to new research published by the Urban Land Institute (ULI)
Terwilliger Center for Workforce Housing. The severity of the
problem threatens the region’s future economic viability and, unless serious policy
changes are made, new home development will leave significant unmet demand,
leaving thousands of working families “priced out” of affordable housing
options.
The report, “Priced
Out: Persistence of the Workforce Housing Gap in the San Francisco Bay Area”
examines
the availability of for-sale and rental housing to workforce households.
Approximately 30 percent of the metro area’s 2.7 million households fall in
this income range. The study analyzed the housing market in nine counties—Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, San Francisco,
Solano, and Sonoma—and found that only 15% of the existing for-sale
housing stock in the Bay Area is affordable to workforce households earning the
median family income. This compares with between 50 and 60% in
many of the Bay Area’s peer metropolitan regions. In fact, every county
in the Bay Area ranked as being one of the least affordable in the country with
only New York City being ranked less affordable.
“Families in
the Bay Area are finding it harder and harder to escape the high cost of
housing,” said Henry G. Cisneros, former Secretary of the US Department of
Housing and Urban Development and Advisory Board Member of the Terwilliger
Center for Workforce Housing. “There are no real ‘fringe’ locations in the Bay
Area where working families can choose to trade off a much longer and expensive
commute in exchange for an affordable housing option.”
The report
also found that uniformly high housing costs are similarly pervasive in the
rental housing market, which serves 42% of workforce households in the
Bay Area. Workforce households have a much higher propensity to rent in
the Bay Area, especially among families, than in peer metropolitan regions
across the country. Furthermore, Bay Area rents are high and a
disproportionately high percentage of workforce households also pay more than
30 percent of their incomes on rent, more than in peer metropolitan regions
across the country.
Given the
large percentage of the population represented by the workforce, and their
importance to major industries supporting the Bay Area economy, the housing
shortage needs to be addressed “sooner rather than later,” said ULI Terwilliger
Center Chairman J. Ronald Terwilliger. “The bottom line is that workforce
households are critical to keeping the economy afloat and they offer a deep,
relatively untapped market segment. Creating these housing opportunities would
improve the competitiveness of the Bay Area as an attractive place to live and
work.”
Between 2010
and 2030, the Association of Bay Area Governments projects that the Bay Area
will add more than 500,000 households. Given this growth, Priced Out estimates that the Bay Area will face a shortage of at
least 6,000 for-sale housing units affordable to workforce households by 2025.
Moreover, demand for new rental housing is projected to exceed supply by almost
23,000 units, resulting in a total shortage of more than 29,000 workforce
housing units in 2025.
"Priced Out," prepared for ULI by RCLCO/Robert Charles Lesser &
Company, is the second in a series of Bay Area reports released by the ULI
Terwilliger Center in recent months. In November, ULI released "Bay
Area Burden," a report showing that Bay Area households spend on average
nearly 60% of their income on transportation and housing costs alone.
"Bay Area Burden" also highlights the impact of these costs on
the environment and makes available a consumer cost calculator that helps users
determine their own true costs of housing and transportation. The two reports
and the cost calculator can be accessed on a new website. Their purpose is to bring more awareness and subsequent policy changes to
measurably increase the supply of workforce housing in high-cost markets
throughout the nation.
To help illustrate how these issues impact working families throughout the Bay
Area, "Priced Out" provides a series of workforce housing profiles that show the personal and economic realities that families are facing every
single day. For instance, only 14% of the for-sale housing in the
Bay Area is affordable to a family in San Jose making a combined annual income
of $92,000. Only 9% of the for-sale housing market is affordable to a family in
Alameda with a combined income of $78,000. The conditions are just as
severe for families seeking rental housing as rents in the Bay Area are among
the highest in the nation.
In both for-sale and rental categories, the Bay Area’s workforce housing
shortage is most severe among “family households,” which has the most
difficulty finding appropriate housing because larger households require homes
with more bedrooms, which typically are more expensive. The report notes that
nearly every profession includes employees who fall into the workforce housing
income range, including those who work in the fields of public service;
professional, scientific or technical services; health care and social
services; construction; retail; administrative support; finance and insurance
services; and education.
“If current trends continue, new construction will fail to meet the significant
projected demand for workforce housing in the future,” said Jim Wunderman, president and CEO of the Bay Area Council. “Unless these issues are seriously
addressed, not only will Bay Area families continue to be priced out of housing
options, but the region’s future economic viability will be threatened.”
"Priced
Out" concludes that the San Francisco Bay Area suffers from a workforce
housing shortage that is among the most acute and widespread in the nation.
Despite the recent housing market downturn, the high cost of housing remains a
critical challenge to the long-term economic health of the Bay Area. While most
metropolitan areas exhibit a pattern in which workforce households cannot find
affordable for-sale housing in neighborhoods convenient to major employment
concentrations, what distinguishes the Bay Area is that workforce households
are priced out of the for-sale housing market almost entirely. Left unchanged,
the pervasive and persistent housing burden of workforce households in the Bay
Area will imperil the region’s economic vitality.