Bay Area Housing for All – Hope for Improving the North Bay Housing Crisis
It’s no secret that there is a housing crisis in California that’s also particularly severe in the North Bay. And while efforts have been made since the Great Recession in 2008 to get more housing built, the programs and funding haven’t been able to meet our need for more housing. If you compare California to states like Texas and Florida, we are falling way behind in housing production. Every employer we speak to names recruiting and retaining staff as a top issue they face. Roadblocks seem to exist to prevent a sustainable, vibrant, and diverse North Bay.
In How do you solve the California housing crisis? California Association of Realtors looks at the American Dream in the Golden State by Sarah Wheeler, we learn that in California, “… the largest state by population, one out of every eight Americans lives in the Golden State, but the homeownership rate is dismal. According to Ben Metcalf, managing director of the Terner Center for Housing Innovation at UC Berkeley, the homeownership rate for California is 50 percentage points lower than the rest of the nation at only 44% in 2021. That represents a serious downtrend from a 50% homeownership rate in 2000,” says Wheeler.
Why? Wheeler says, “Notoriously high home prices are to blame, with monthly payments for a typical California home sitting at more than $5,500. The Terner Center has shown that about half of the homeownership gap is directly attributable to the affordability crisis, which in turn is a direct consequence of a housing supply shortage. ‘We’ve made it difficult to build new housing,’ Metcalf said, citing environmental regulations, building codes, local control and the opposition to building infill multifamily housing.”
Robert Kleinhenz, director of the Office of Economic Research at California State University, “noted that the state has been woefully undersupplied for years. In 2000, the California Association of Realtors estimated that the state would need about 250,000 new units a year to keep up with demand. But Kleinhenz said the state has never gotten close to that number, so it’s now 2 to 2.5 million units behind. ‘The increase in home prices is due to increasing demand versus supply — we have to build more,’ Kleinhenz said. ‘How many housing units are we building? For the last 10 years, building permit numbers never surpassed 120,000 units.’”
Selma Hepp, chief economist at CoreLogic, pointed out “that in 2023 the entire state of California issued only 70,000 permits for single-family homes — about the same number as the Houston metro area. ‘California [has been] the most inventory-constrained market for years.’ As a result, the housing gap is creating a labor force gap as well. ‘Think about year over year the numbers of people leaving California.’ Hepp said. ‘We need to shift the conversation to: How do we ensure kids can stay here and have the same opportunity as we did?’”
How to incentivize the production of housing has been THE question for decades. Wheeler said, “Metcalf said there have been 140 distinct pieces of legislation on housing affordability since 2016, but those laws haven’t made much impact in the permitting numbers. The passage of SB 9 in 2021 outlawed single-family zoning, and there have been numerous attempts to expand the ability to build accessory dwelling units (ADUs) to increase density.”
“Ministerial approval — a streamlined permit process that doesn’t require public hearings or sign-off by local officials — took effect in California in 2018 and has the potential to move housing forward. But even with all of these laws, costs and local regulations are still limiting factors for development.”
What more is needed? Some think the modernization of the California Environmental Quality Act is key, others see better zoning, including the reuse of commercial buildings now vacant because of more remote working, and government funded low-interest loans. But one new effort to build more housing is coming: a ballot measure for a Regional Housing Bond to fund construction of affordable housing.
The Bay Area Housing Finance Authority (BAHFA) – the first regional housing finance authority in the state – wants to place a $10-$20 billion affordable housing bond measure on the November 2024 ballot to benefit the nine-county Bay Area. This money would be used to build affordable homes and help keep existing housing affordable in every county.
A $20 billion bond could create 80,000 new affordable homes — over two times more than what would be possible without a bond.
80% of the bond revenue will go directly to the nine counties and four cities—San Jose, Oakland, Santa Rosa, and Napa—letting local governments determine how best to produce and preserve affordable housing for their own communities.
BAHFA will invest 20% of the bond revenue in affordable homes throughout the region, while also generating new housing resources to support affordable housing development long after the bonds are fully spent.
Through the measure, each of the nine Bay Area counties and the four cities will adopt their own expenditure plan for how they propose to spend the money. BAHFA will review each plan and confirm that it meets basic criteria.
The majority of funds (at least 52%) must be used to produce new housing, and most of that new housing should be affordable to low- and extremely low-income residents.
NBLC is monitoring the bond development and working with other business-oriented groups to ensure that the money from the bond achieves its purpose of spurring new housing construction. One area of focus is to have bond money help cover the costs of inclusionary zoning units in market rate projects. Inclusionary zoning has proven to be a deterrent in new housing construction and having those costs covered could produce more housing that otherwise could not be built.
