Executive Summary: Priced Out
Download: Priced Out: Key Findings
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Housing in the San Francisco Bay Area is persistently and pervasively unaffordable despite the recent economic and housing market downturn. As of the middle of 2009, every county in the Bay Area fell within the 15 percent least affordable in the country, and only New York City ranked less affordable.
The high cost of housing is particularly challenging for “workforce” households, which the ULI Terwilliger Center for Workforce Housing defines as those earning between 60 percent and 120 percent of the area median income (AMI). These residents, who work in important growth industries such as education, health care, and professional services, must contend with a housing stock in the Bay Area that is overwhelmingly, and in every county, oriented toward higher-income households.
Only 15 percent 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 percent and 60 percent in many of the Bay Area’s peer metropolitan regions. This low number is due in part to the fact that high housing prices extend across the region, and are not just concentrated in “closer-in” locations. In the Bay Area, moving “further out” does not necessarily lead to less expensive housing.
As a consequence of the uniformly high housing costs, Bay Area households in the “workforce” income range are largely priced out of homeownership. Owner-occupied workforce households in the Bay Area spend more of their income on homeownership than do households almost anywhere else in the country.
Uniformly high housing costs are similarly pervasive in the rental housing market, which serves 42 percent 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.
Unless serious changes are made, future construction will not alleviate the problem. A scarcity of appropriately zoned and located land together with relatively high development costs makes it nearly impossible for builders and developers to deliver high-quality new rental communities at price points affordable to workforce families.
If current trends are any indication, housing production between 2009 and 2025 will leave unmet additional demand for at least 6,000 for-sale housing units appropriate for workforce households. Demand for new rental housing is projected to exceed supply by almost 23,000 units resulting in a total shortage of almost 29,000 workforce housing units.
