By Derek Barnes–
Since the city of San Jose was established in 1777, the Bay Area has long been a destination for people across the globe seeking a chance for a better life, regardless of their economic circumstances. Industries flourished, and cities were built to support vibrant commerce and a steady stream of incoming labor. You could come with little to nothing, possess a functional skill and strong work ethic, and improve your economic condition. However, since the start of the 21st century, the Bay Area has faced a unique and increasingly persistent challenge—a growing affordability crisis in housing.
Despite the concerted efforts of legislators, developers, and advocacy organizations, the problem of “affordable housing” in the Bay Area remains unsolved. Defining “affordable” is also elusive and often confusing. For the sake of our examination, let’s assume that affordability simply means that individuals or families with low to moderate incomes can obtain housing without spending an excessive amount. In the 1950s, a U.S. household spent about 22–25% of their gross income on housing, depending on geography. Today, the percentage may be between 35–40% in the Bay Area for moderate- and low-income households. As rental and purchase prices skyrocket, low-income and working-class families struggle to find suitable and affordable housing.
Let’s examine why obtaining more “affordable housing” in the Bay Area is a flawed goal, a false promise, and merely a distraction from focusing on core structural issues that persist and deepen economic inequities. At over $800k+ to build a unit of housing in the Bay Area, who bears the ultimate responsibility for providing housing that working-class families can afford?
First, our “housing crisis,” lingo used by legislators and experts, is one we’ve manufactured through a series of fouls and missteps. Bay Area residents have been handed myriad solutions ranging from rent control and stabilization schemes, renter protection laws, and new building restrictions. All promise to make housing more accessible and affordable. However, housing affordability continues to decline, and the “solutions” offered by the governments and developers have proven inadequate and ineffective. This ineffectiveness can be attributed to flawed policies and regulations that fail to account for the long-term unsustainable nature of the current housing market.
Misguided housing policies (only focused on the short term) and longer life expectancy have effectively shunted the natural movement of people and families in the housing market. More people, less supply, stagnant household incomes, and higher costs have significantly impaired and damaged our housing ecosystem. People are not moving up, literally and figuratively. The confluence of these market realities sets up conditions that ultimately harm our middle and working-class families—especially in under-resourced and marginalized communities.
Another reason that the goal of “affordable housing” has become a false promise is due to the low-ball estimates of housing needs. For example, the Association of Bay Area Governments (ABAG) estimated that a total of 68,000 new housing units would need to be built in the Bay Area between 2014–2022, to meet the increasing housing demands. However, a recent report by the city and county of San Francisco estimates that the actual number of new homes that need to be built is 420,000 (San Francisco Planning Department). This disconnect between the estimated number of homes needed and the actual number needed is another significant factor in the current affordability crisis. It demonstrates why “affordable housing” is an unattainable goal because we have failed to project the actual production needed, and the astronomical cost increases to build a housing unit.
Due to the influence of powerful developers and lobby groups, Bay Area housing incentives and regulations have consistently favored large-scale housing projects rather than supporting affordable, small-scale housing for individual households. The result has been a skewed real estate market that has favored large-scale corporate projects more targeted to higher-income individuals and neglected the needs of working-class and low-income families. It has become increasingly clear that the goal of a truly “affordable” housing market in the Bay Area is unattainable without significant policy reforms and industry innovation. This includes incentives (less stick, more carrot) to keep our small legacy rental owners/operators in business since they already provide most of the “affordable” units in the market, as well as promote the construction of smaller-scale housing to combat the current housing crisis.
The burden of delivering better outcomes falls squarely on legislators and municipal leaders working with the private sector. The public should not be distracted by policy red herrings either. They must hold policymakers accountable for the poor legislation they enact that ultimately harms low- and moderate-income households the most. Ultimately, it is the responsibility of government to cultivate an environment that attracts business, supports commerce, and stimulates adequate housing production so regions and cities can thrive.
As people migration increases due to regional socio-economic instability, climate change, and natural resource depletion, having enough affordable housing will continue to be a problem for the Bay Area and nationally. As real estate markets continue to soar, the need for housing that is affordable for working-class families is becoming increasingly more urgent. The goal of delivering more “affordable housing” in the Bay Area may continue to be a false promise if significant changes aren’t engaged to create a housing market that is equitable and fair.
Derek Barnes is the CEO of the East Bay Rental Housing Association (www.EBRHA.com ). He currently serves on the board of Homebridge CA. Follow him on Twitter @DerekBarnesSF and on Instagram at DerekBarnes.SF
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Published on October 19, 2023
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