While San Francisco commands more headlines for its exorbitant rental prices, San Jose has struggled to meet affordable housing goals of its own.
An annual report coming before the City Council this week highlights just how far behind the city has fallen in meeting overall housing demand and what that means for Silicon Valley’s poorest residents.
In 2013, the city approved 494 affordable housing units—80 percent short of what’s prescribed by the Association of Bay Area Governments (ABAG). ABAG, a coalition of local municipalities, allocates regional housing needs and assigns benchmarks for each city. According to the association, San Jose was supposed to have built about 35,000 housing units between 2007 and this year. To date, the city has issued permits for just 46 percent of that goal, with inclusionary housing fees held up in court and redevelopment agencies a thing of the past.
The city considered a housing impact fee in December to help pay for more below-market-rate homes, but business groups argued that it could scare away developers and asked for a few-month delay to study the issue. The proposal, which would charge anywhere from $14 to $24 per square foot of new housing, is expected to come up again this spring.
Though San Jose still tops the charts as one of the priciest markets in the nation, homeownership made strong gains in 2013 with median housing prices ($685,000) closing in on pre-recession heights. Still, a median-priced home would require a downpayment of $137,000—about twice San Jose’s median household income of $80,000.
“[S]aving for a 20 percent down payment of about $137,000 for the median priced home, while paying astronomical rents … puts additional burden on first-time homebuyers and makes it impossible for many to attain homeownership,” states Laurel Prevetti, assistant director of the city’s Department of Housing and Community Development, in the report.
Recovery in the rental market, while a sign of overall economic health, puts housing prices increasingly out of reach for the lowest-income earners, she adds. Average monthly rents topped $2,000 last year, a year-to-year increase of 11 percent. That means to afford a one-bedroom unit in San Jose—so the cost wouldn’t eat up more than a third of one’s income—a person would need to earn $73,000. That’s far more than a bank teller, retail worker or preschool teacher typically earns, Prevetti points out.
It’s important to note, she says, because while the post-recession recovery has created more jobs for high-skill, high-wage workers and the low-wage sector, there haven’t been many gains for middle-class jobs. That means cities have to think more and more about how to house lower-wage earners.
“As low-wage employment increases, the challenge of housing affordability affects more households and families,” she writes.
In the absence of middle-wage jobs and housing for low-wage workers, the city has seen a “bulging underclass, an increasingly stagnant group of low-wage predominantly immigrant workers in the service sector,” according to a recent report by the Remapping Debate.
The number of households earning $10,000 or less a year doubled between 2000 and 2010, according to Working Partnerships.
“Unlike people in the middle range, these workers cannot afford a long commute, so they need to live somewhere in the Valley, but they also can’t afford the housing,” the Remapping report reads. “So how do you do that? … You double up, triple up, quadruple up.”
More from the San Jose City Council agenda for March 18, 2014:
- Environmental consulting services will cost the city $1.2 million through 2016. The city used to employ consulting firms on a case-by-case basis, but environmental reviews became so complex that it made more sense to enter into years-long contracts. The four firms covered by the $1.2 million will be responsible for making sure San Jose is up to code as it deals with groundwater contamination, air quality, lead paint risks and other issues at various city-owned properties.
- For two decades, San Jose has been designated by the state as a Recycling Market Development Zone, a region that provides incentives to recycling-based businesses. Every decade, that designation expires, so the city wants to ask CalRecycle to renew it for another term. San Jose can leverage this designation to apply for grant money and offer breaks to recycling-oriented businesses.
- Council members Johnny Khamis and Ash Kalra plan to visit Washington D.C. next week as part of a Silicon Valley Leadership Group advocacy trip.
- Seven single-family homes on the unincorporated east side of Quimby Road may get annexed into the city.
- Willow Glen’s special business district, wherein property owners along Lincoln Avenue pay extra for special services like events and signage, submitted its annual financial review.
- The city wants to support a state bill that would get pharmaceutical companies to pay for programs to dispose of unwanted drugs.
- Councilman Sam Liccardo’s plan to house the homeless in hotels and motels comes before the council for a vote in the evening.
- The city considers a new game plan to reduce greenhouse gas emissions.
- City leaders will weigh in on whether at least one of the Century Theater domes should be considered an historic landmark, which would spare it from demolition.
- San Jose wants to find out if biosolids like wood waste and yard trimmings can turn into vehicle fuel.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260