At gatherings late last year, people throughout the Peninsula had a chance to express their feelings and experiences relating to — or inflicted by — the “housing crisis” that severely impacts individuals, families and businesses in the three-county Silicon Valley region.
Some impacts are astoundingly positive. A friend recently sold a modest home in north Palo Alto for several million dollars, reaping what he called “The Palo Alto Lottery.”
But many thousands of others are driven to the brink of poverty, if not into full-blown poverty, by housing costs. Others simply move away — but are drawn back to the strong job base of Santa Clara, San Mateo and San Francisco counties.
Many nonresidents can’t buy in yet still must commute to where the jobs are, spending hours a day in heavy traffic.
For several decades the cost of housing and its side effects have been topics of community discussion, planning and much (verbal) hand-wringing by government officials. In the late 1960s I wrote an article for the former Cry California magazine on “The Palo Alto Experience,” detailing how housing costs way back then were forcing people to drive an average of 18 miles a day to get to work. The 2.4-to-1 job-to-housing ratio was a factor. It’s gotten worse.
From today’s perspective, the “crisis” has become acute. Discussions about housing have become increasingly intense, especially as communities wrestle with what might be done to alleviate the problem. Virtually no one uses the word “solve.”
Last November, nonprofit and neighborhood groups co-sponsored community-discussion forums about the price of homes and apartment rents. People from many income levels, job types and family situations met in varying-sized groups to share their stories about housing hardships and how they handle, or struggle, with them.
The umbrella co-sponsor was Joint Venture Silicon Valley, an industry-based group that has assumed responsibility for monitoring a wide area of social and economic trends, under the leadership of CEO Russell Hancock and his predecessor, former state Senator Becky Morgan.
The group publishes an annual “Index” of conditions and trends in the Silicon Valley region. It publishes periodic updates on the economy.
Several years back, Hancock warned of a “shrinking middle class” in Silicon Valley. At one housing-discussion group in Palo Alto, held at the Covenant Presbyterian Church in south Palo Alto, the moderator was Margaret “Peggy” Jensen, deputy county manager for San Mateo County. A half-dozen participants recounted their predicaments and strategies.
Jensen noted at the outset that every workday some 200,000 cars move into and out of San Mateo County — more than four times the number driven to a ball game at 3Com Park. Side effects include use of fuel, pollution and cost — financial and personal.
A Bay Area Council poll last year found that 40 percent of those who responded said they “may leave the Bay Area” entirely because of the cost of housing and other factors, she indicated.
Past land-use decisions are significant, she noted. About 75 percent of San Mateo County land is dedicated to agriculture or open space or is limited by the steep slopes on both sides of Skyline Ridge. Both agriculture and open space have their fiercely dedicated proponents who would fight to preserve those lands.
On the flatlands, about two-thirds of the houses are single-family dwellings, and Peninsula communities have consistently lowered height limits of apartment or condominium buildings.
Local funding to build “affordable housing” largely dried up when the state eliminated redevelopment agencies (in early 2012), she added. To backfill the loss, San Mateo County voters approved a bond measure for such housing.
Yet even with such funding the number of units that would be possible to build would satisfy just a fraction of the demand for either the workforce or overall, for any age or occupational group.
One glimmer of optimism arises from a surge of interest in building below-market-rate housing by entrepreneurs, according to an article by Marisa Kendall, a reporter for the Bay Area News Group who covers venture capital and startups.
“An emerging group of local entrepreneurs is taking up arms against the sky-high cost of living in the Bay Area, hoping to end once and for all the housing crisis crippling the region,” she wrote in a recent article. “These founders, intent on disrupting the housing market and bringing down costs, are stepping in as government officials and nonprofits struggle with the enormity of the problem.”
A Joint Venture report last July on “The Peninsula Economy” reached four conclusions: (1) job growth has slowed; (2) unemployment rates are low; (3) growth in the labor force has stopped; and (4) the housing shortage remains, with record rents and prices. Yet some large companies, such as Google, have announced major job expansions.
Hancock is known for his optimism about what he calls the amazing “phenomenon” of the Silicon Valley economy of risk and innovation and challenge-solving abilities. But he acknowledges that he’s unsure about what can be done about the housing crisis.
“I’m an optimist by nature, so it pains me to find myself feeling pessimistic about housing in our region. But it’s hard to see a solution,” he wrote in an email response to my question about “solving the housing crisis.”
“We’re highly developed already; people are opposed to density; they’re also opposed to vertical developments; and it means that we’re nowhere close to providing the kind of supply that can meet our burgeoning demand. I don’t know what can change it.”
Yet there is a change in “the tenor and tone” of the discussion, he said. “People are referring to this now as a crisis — ‘the housing crisis.’ That has come into common parlance.”
The November dialogues “have made more people aware and willing to advocate for density in the appropriate places,” meaning “elected officials will feel more support” when facing local opposition.
Former Weekly Editor Jay Thorwaldson can be emailed at jaythor@well.com.
Good editorial, thank you. Whether or not the situation can be solved can be debated endlessly. But we can immediately stop making the situation worse by not adding to the demand side of the equation by relentlessly approving large commercial development. We need to slow down at least a little and at least for a while to catch up on repairs and improvements that are critical to supporting existing demand.
Apple and Amazon have both announced they are building new centers in other parts of the country other than Silicon Valley.
Is this the beginning of high tech decentralizing away from Silicon Valley?
I don’t know but it is beginning to look possible.
I doubt if we will ever see a reduction of the numbers of people living in this area, but we could be seeing fewer coming here. There just might be some light at the end of the tunnel.
What’s Silicon Valley doing to stop adding underpaid $60,000 H1B visa employees that are packed into hacker hotels? Whatever happened to “do no evil”?
The problem is simple. City governments generally encourage job growth with new workers mostly coming from out-of-state, but housing growth has been minimal for years. The only solution is to bring these two forces more into balance. Do cities have the political will to do so or not? Do NIMBYs even want the problem solved? Sitting on millions of dollars in profits is a big reason to want nothing changed.
People will never all live next to their jobs, they are not coral who attach to a rock and never move. The example of Hong Kong shows that cities cannot build their way to affordability, and that having the best transit in the world with over 90 percent usage does not solve the problem. Even in Hong Kong, the phenomenon of people living far from work is a substantial issue. People are neither coral, nor do they move easily to where their jobs are every time they change work.
Safety buffers and infrastructure are not infinitely elastic here and are already overburdened. The only solution is to create additional job centers that are equally attractive and that attract employers, reducing the overstock of jobs here. We have Stanford and startups from Stanford, so we can only benefit from companies like Palantir moving where they can expand and stop being so selfish and burdensome to the city they are trying to turn into their own private company town.
The article says
“Yet even with such funding the number of units that would be possible to build would satisfy just a fraction of the demand for either the workforce or overall, for any age or occupational group.”
People talk about increasing housing stock as if the demand sizde is unrelated. Building more housing will also result in increased corporate presence and activity, further creating demand for housing. Afain, Hong Kong demonstrates that building more housing in a vain attempt to get ahead of demand is a fool’s errand.
This is not to say that affordable housing is the same issue for traditionally low wage workers. If we stop allowing developers to use the issue as a Trojan Horse for overriding safety and quality of life to cash in on overdevelopment, and bring down the demand side by moving more companies out and reducing heavy local daytime workforces, there will be more ability to appeal to the public for affordable projects that are just affordable projects, not some kind of sweetener on top of a majority zone-busting for-profit endeavor like Maybell was. (Recall that the same neighbors had been a part of supporting and creating affordable housing in the same neighborhood, when it was just about affordable housing.)
I think the answer is simple:
Protect the City from overgrowth of large corporate employers. Companies can more easily move where they can grow than families or Stanford. Reducing the glut of employees who commute here is the most important step.
The City should set aside money every year to eventually purchase all the retail areas in the City. This is the only way to retain reasonable, resident-serving retail into the future. This will allow the City to derive a benefit in perpetuity, that increases over time without any additional costs, the way Stanford does. In exchange for lower rents to commercial renters, the City could require higher wages for traditionally low-wage workers and thus solve the problem in a way that gives people dignity and choices (and a path out of poverty) rather than the inefficient and wildly expensive creation of public developments that will NEVER solve the problem.
Yay for Amazon putting its hdqtrs somewhere other than here. Let’s hope they make investments in the local community that make the area attractive and increase the number of innovation centers around the country. We have Stanford, we do not have to hiard all the jobs here to continue to be a center if innovation (in fact, getting the too-large comoanies out will make room for startups again).
The article says:
>> Past land-use decisions are significant, she noted. About 75 percent of San Mateo County land is dedicated to agriculture or open space or is limited by the steep slopes on both sides of Skyline Ridge. Both agriculture and open space have their fiercely dedicated proponents who would fight to preserve those lands.
It would be foolish to further develop those steep slopes. As we have seen time and time again, such as most recently in the foothills above Montecito, there are large risks to life and property and large externalities incurred eventually whenever hillside development takes place on a large scale. It is very fortunate that most of that land is undeveloped or is very low density.
>> On the flatlands, about two-thirds of the houses are single-family dwellings, and Peninsula communities have consistently lowered height limits of apartment or condominium buildings.
Significant areas of Redwood City near downtown have new condo developments that are 75 or 100 feet high. Palo Alto is usually 50 feet. Somebody could list all the cities on the Peninsula, but, using these two examples, you easily accommodate 3-4 story buildings, even 5-7 story buildings. 3-5 story buildings can support extremely high overall densities if that is the goal.
As poster “Sense” above points out, though, once people have moved in, even with density and transit, they often find jobs that are far away, so that they are once again “living far from work”.
When politicians talk about jobs/housing issues, one often gets the sense that they think people will move next to their job and settle down. That is how it worked in a company town back in the day, but, in a free labor market, people are not tied to their jobs for life.
I happen to prefer “walkable cities” over “Broadacre City”, https://en.wikipedia.org/wiki/Broadacre_City , and, I don’t object to higher density residential areas with reasonable height limits (I think 70-75 ft is best for this purpose). But, even with density, transit, and walkability, many people are going to be an hour or more from work. You can’t tell people not to take a more interesting, higher-paying job, just because it will increase their travel time.
The solution is simple: convert all tech-oriented commercial space to housing. And eliminate the land-wasting R-1 zone for good measure.
Force each of the new hotels to dedicate a floor or 3 to housing.
Posted by Online Name, a resident of Embarcadero Oaks/Leland:
>> Force each of the new hotels to dedicate a floor or 3 to housing.
1 employee apartment for every two rooms is about right for a mid-high hotel. But, jobs/housing imbalance always falls by the wayside when hotel tax revenue comes into view.
This is unrealistic, but it would be best to keep politicians out of the decision making/planning process b/c they are too vulnerable to forces that serve their own self interests. We need people like above poster SENSE to be part of the process b/c SENSE makes sense and we badly need that. Ambition and payback benefit individuals, not communities.
We also need to keep in mind that occupancy rates are much different in this tech economy than they were in the past and factor that into all planning.
What ever happen to Portola Valley affordable housing plans?
We should be clear. The solution to the housing crisis is to relieve constraints on market rate residential construction. Full stop. The Bay Area in general, and SV to the greatest degree choose not to. That is a political choice collectively made by residents and leaders. That’s our decision to make, but let’s not pretend that the problem is insoluble. What *is* insoluble is trying to resolve the housing crisis without allowing adequate market rate housing to be constructed. That would be akin to trying to end famine without allowing market rate food to be grown and distributed. It’s time we stop playing these word games. For a variety of reasons we’ve decided on enforcing a housing shortage and that we’re fine dealing with the consequences including a vast homeless endemic, disease outbreaks in homeless camps, crippling poverty, and higher yet child poverty, gigantic, ever growing traffic crisis, and escalating costs on scarce public dollars.
In my opinion it’s a grossly immoral decision, but it’s ours to make, and we’ve made it.
Housing is solved – you just don’t like the solution. There is equilibrium between the limited supply and almost unlimited demand.
People want to come here for high wage work. High cost of housing keeps them out.
No matter how much housing you build, it will simply attract more workers; and prices won’t budge..
It is a stable equilibrium. Good luck fighting economics.
What about slowing down and limiting job growth? That’s the most effective way to dealing with the Jobs-Housing Imbalance.
De-annex Stanford. They have many, many non-academic jobs but very little non-academic housing. Why should Palo Alto try to solve Stanford’s problem? Let Stanford argue with ABAG instead of us.
Just let the marketplace resolve the issue. Those who can afford to live in PA will live here. Those who cannot will need to move to where they can afford to live. No need to stop economic progress in PA.
We need to limit job growth here and let those jobs go to other areas of our country that need them!There are many areas of our nation that have a tech-educated workforce/lower cost of living/great quality of life and need the jobs. Currently, even people who don’t want to live here feel that they must because this is where the jobs are. (Most of my 20-something friends would rather not live here: housing is too expensive and it’s too frustrating to get to/from work.) As long as Google, Facebook, and others continue to grow here, people will continue to move here. It’s an endless cycle. Meanwhile, we lack sufficient housing, water, transportation, doctors, schools, etc to handle those who are already here. We have seen this cycle before as HP, Intel, etc grew, but those companies eventually spread out over the country, which spread the jobs, spread the wealth, and (at least temporarily) eased the local housing pressure.
As posted above, supply and demand works.
Generally, the market, regulated by clear and firm zoning, is the basic framework for housing. It is self regulating and prevents “lottery” phenomena such as are created by rent control or PC spot zoning gifts.
But some people think it isn’t good enough because they are convinced:
1. There is a network effect, or growing synergistic benefit based on higher and higher density. These people think that higher density will bring more and better restaurants and retail, more cultural events, better mass transit, more walkability, and probably more diversity, less crime, warmer, closer communities and less traffic, and fewer cars.
2. We have an ethical or moral obligation to provide housing in Palo Alto, even when they cannot afford it, for the poor, for the young, for the old, for those from third world countries or any other countries, for those without proper resident or citizenship documents, for those whose income and values don’t make paying for housing in Palo Alto easy or guaranteed.
#1 is wrong now; the opposite is now true. Our social, infrastructure, cultural, and governmental systems are bursting at the seams. We have long passed the point where more people benefit those who are already here. This is often supported by pretzel logic: “more people, but they’ll drive less so there will be less total traffic!” “It rained a lot last year so we have more than enough water for everyone who wants to live here!”
Attempts to address #2 have been so inept that they backfire. At best, they are a lottery.
Insoluble.
The city and its citizens wasted two obvious opportunities:
– Maybell : 16 luxury homes where there could have been dozens and housing for the elderly.
– Buena Vista : $60M wasted for a parking lot for 50 travel trailers where there could have been over 100 units developed AT NO COST TO THE CITY.
The CC will never think strategically and is about to become overwhelmed with the school budget shortfalls and pension bankruptcy. The Palo Alto we knew when we grew up is long gone – destroyed by techies, greedy companies, newcomers, and the small minded.
So so sad….
@James and @Calvin say that market forces work and should be allowed to play out. Here is the issue with that from my perspective. I don’t want to live in a town with only well-off bankers, lawyers, and techies. (Otherwise I’d live in Atherton…) I want to live in a town that has a variety of income levels, demographics, skill sets, etc. I appreciate that diversity. Importantly, I want to live in a town where the people who perform essential functions for the town (teachers, police, etc) can afford to live in it. I want to go to shops and restaurants where the workers are local, where they don’t have to commute an hour each way to get to work. In my opinion, it is distinctly to my advantage, and to the advantage of our whole community, to foster truly affordable (which means below market rate in this town) housing, specifically for cases like this. I don’t know how to do it, but I strongly support people who are trying.
“a town that has a variety of income levels, demographics, skill sets, etc. I appreciate that diversity. Importantly, I want to live in a town where the people who perform essential functions for the town (teachers, police, etc) can afford to live in it. I want to go to shops and restaurants where the workers are local, where they don’t have to commute an hour each way to get to work. “
Its called “Communism”.
Nothing wrong with it – but its not the way the free market works.
And as we know from history, communist countries that try it eventually fail.
as you say:
“I don’t know how to do it “
I think history shows that nobody has been successful doing this in the long run.
The big-picture question surrounding our region’s housing situation is this: what kind of society do we want to build? Do we want a society where the health of our planet, teachers, and community is left to market forces? Or do we want to build a market that provides for the health of our planet, teachers, and community?
To Curmudgeon: Just to be clear: Stanford proper is generally not part of Palo Alto – it is an unincorporated town in Santa Clara county. The Industrial Park and the Shopping Center are in Palo Alto, the latter so that the city of Palo Alto would get a share of the sales tax generated there. Moreover, as far as I know Stanford is the only entity in the Palo Alto area that currently has any employee housing on its grounds, although I gather that both Google and Facebook have plans underway for large amounts of housing for their employees.
If the comments here are any indication, it’s of the need to take land use decisions with regional implications out of the hands of provincial towns who have proven themselves incapable of solving the problems which they themselves created.
“The Industrial Park and the Shopping Center are in Palo Alto, the latter so that the city of Palo Alto would get a share of the sales tax generated there.”
Um, if Stanford is not in Palo Alto, why was its hospital expansion project subject to city hall review and approval?
How many jobs does Palo Alto shed if it de-annexes the industrial park? The shopping center? Every job we can lose is a gain.
What do Facebook’s and Google’s company housing plans have to do with our ABAG mandate? They are outside Palo Alto; Facebook is even in another county.
Another idea that won’t solve the problem but would help: Discourage vacant housing. If new units are snapped up by investors to sit empty, the new housing accomplishes nothing. For example, Vancouver instituted a high tax on foreign investors that has worked. (Can we increase the annual property tax on purchases by non-US residents/citizens?) Is there more we can or want to do to legislate against vacant units –to discourage people from buying and holding units “just in case” parents/kids/I want it someday? It might be fine for people to hold units for appreciation or for “just in case”, but the units should at least be rented out. No point in pushing to build new units that won’t be occupied.
I agree with some posters here that we have a type of market failure going on. Those Libertarians posting occasionally who think that markets are always perfect can’t figure this out because they won’t look at the reality of public streets. The Developer contingent who insist that “build more housing” also refuse to look transportation in they eye. And, unlike some of my fellow Liberals, I don’t think there is any easy single solution.
Cities are wonderful, generate almost all of the world’s monetary wealth, and apparently are where everyone wants to live for maximum enjoyment. But, cities also require careful management of transportation, education, security, utilities, health, and wealth (including the lack of wealth — poverty).
Stanford Hospitals and basically the whole area west of Quarry Road and north of Pasteur Drive is within the City of Palo Alto boundary. Difficult to derive this from our city website.
Posted by Robert, a resident of another community:
>> If the comments here are any indication, it’s of the need to take land use decisions with regional implications out of the hands of provincial towns who have proven themselves incapable of solving the problems which they themselves created.
The 9-county “Bay Area” has a population of about 7.68M, while the larger 12-county CSA has a population of 8.75M.
https://en.wikipedia.org/wiki/San_Francisco_Bay_Area
Since people are commuting to Palo Alto from the entire CSA, I guess according to your logic we should just have one single government, like NYC, which has a population of about 8.5M? What outcome would you expect?
The “provincial towns” didn’t create the housing problem. If they are guilty of anything, they are guilty of not forcing a limit on job growth where millions of people feel they must move to SV. iLocal towns should have put consistent and heavy pressure on tech companies to graduate out of SV and spread the wealth to areas that need economic opportunities, are rich in water resources and can offer much less expensive housing. I would also blame “provincial towns” for not slapping heavy taxes on foreign investors.
Let me say it again, it’s the tech companies who insist on moving only to SV, awhile never branching out, and groups like PAF that enable them who have caused the problem. Local towns have been left with an intractable problem that can’t be solved.
Peninsula governments need to take immediate action against businesses from wanting to locate/grow here. Make it unbelievable painful to “grow” Palo Alto. Put the thumb screws on developers until they scream. Only then will you slow the influx of people and drive them to consider other parts of the country to live and work. Bought here already? Congratulations, you won! Still renting and looking to buy? Our apologies, good luck in your search.
@Invisible Hand. Yes! Exactly this.
Chatting with a newish-to-town millennial while in line at the Peet’s. He had an unabashed entitlement attitude w/regard to housing. Was complaining that he’s already been out of school for 2 years and it just wasn’t fair that he isn’t a Director yet. Then went on and on about how nice Palo Alto is, and how much he wants to buy a house here, and how unfair the pricing is. Said with a straight face that the city should do something to subside his first house. Would be funny if he wans’t so serious about it all. Good lord.
“If the comments here are any indication, it’s of the need to take land use decisions with regional implications out of the hands of provincial towns…”
Yup. Do regional government. Then we average jobs/housing over the entire region and, unlike ABAG, we make housing allocations rationally.
Posted by Curmudgeon, a resident of Downtown North:
>> Yup. Do regional government. Then we average jobs/housing over the entire region and, unlike ABAG, we make housing allocations rationally.
You mean, like, build a bunch of apartment towers in Los Altos Hills and Portola Valley and Woodside?
“You mean, like, build a bunch of apartment towers in Los Altos Hills and Portola Valley and Woodside?”
Why not? Plenty of underutilized acreage there.
And Atherton. Don’t forget Atherton.
Right.
It is intellectually dishonest for people to criticize housing growth as being a handout when housing growth is allowing the market to freely respond to demand, and it’s actually zoning that is a government restriction of the free market.
Zoning plays a very important role, but -own- the reality that it also artificially disadvantages renters and those who work but not live in Palo Alto. Stop accusing growth advocates of asking for something undeserving, when the current rules actually favor homeowners, and perhaps for good reason.
Homeowners have every right to advocate for the way of life that brought them here, likewise, growth advocates have every right to request fewer artificial restrictions to free market housing growth.
There will be a future time that our region wishes it had the problem of too many employers want to work here, so for now, I am grateful that so many want to be here.
So a city plans its growth, with a coherent deliberate plan for business, housing, retail, traffic, parking, open space, cultural and community spaces, etc. It creates zones with limits on height, lot size, FAR, health and safety requirements, building codes, privacy codes, etc.
And the market drives development and prices within this framework.
How does this in itself disadvantage renters or workers in that city?
Check Lytton Gardens, the low-income housing downtown. City Council knows that residents are abusing the system but they don’t enforce the rules. People come over on H1B1 visas, then with chain migration, bring their parents. The parents cannot work, so they qualify for low-income housing. They are only paying $200-$400/month to live a Lytton Gardens and don’t even contribute to our economy. City Council should allow our city workers and educators live there instead, or at least, people who are in the workforce who otherwise have to commute.
Posted by Lytton Garden residents are abusing the system, a resident of Downtown North
>> Check Lytton Gardens, the low-income housing downtown. City Council knows that residents are abusing the system but they don’t enforce the rules.
How many residents are we talking about? What fraction are in violation of the rules? How do you know this?
@Anon: I don’t have the numbers, but spoke with a City Council member who is aware of the issue so it’s at least a fair amount of residents. Plus, does it matter how many are violating it? For someone who is commuting 2 hours each day instead of living at Lytton Gardens, is that okay that even one resident is cheating? There should be no cheating at all. I also had a friend who lived there. She was a single mom who refused to work full-time. I also know someone who is living in low-income housing in another city and he is just too plain lazy to hold a job. I don’t know how they decide who can live in low-income housing, but obviously, there is fraud but it checks the box for the government.
Add lots of office space and enen more housing right next to it. Make the height limit for the office towers dependent on the amount of housing units in the tower they build next door. We are in the heart of Silicon Valley. We should build big and create jobs and affordable housing on a massive scale. Palo Alto is the center of the high tech universe, not a retirement community.
“Palo Alto is the center of the high tech universe”
I dunno, Detroit put all its eggs into one basket and look how that worked out for them.
Palo Alto used to be a delightful, very livable town whose citizens spanned all income levels. It was a town for its people and was the envy of the Peninsula. It had character, it had the best parks, it taught us what “bike friendly” looks like by leading the way with bike lanes and bike trails. It never was nor was intended or designed to be any kind of urban center, and we’re all seeing the pain that results from pretending otherwise.
Posted by Bitty, a resident of University South:
>> Add lots of office space and enen more housing right next to it. Make the height limit for the office towers dependent on the amount of housing units in the tower they build next door. We are in the heart of Silicon Valley. We should build big and create jobs and affordable housing on a massive scale. Palo Alto is the center of the high tech universe, not a retirement community.
Why? For all of this. Do you think it is some kind of moral imperative for us long-time residents to sacrifice ourselves for the sake of Developers?