Increase Housing Choices and Affordability

By almost any measure, the Bay Area is facing a housing crisis. Demand for housing in some communities is causing rents to rise so rapidly that families are priced out of their homes. Many working families cannot afford to live in locations that offer access to employment opportunities and high-quality services, such as schools, health care, public transit, and shopping. Rents and mortgages are consuming a growing share of most households' incomes.

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The Bay Area's acute—and chronic—housing affordability problem

Households are coping with the shortage of affordable homes by paying too much, living in overcrowded homes, facing uncertainty about being evicted or priced out of their home, moving to outlying areas or out of the region entirely, or, in some cases, becoming homeless. The lack of a stable and affordable home makes it harder for people to maintain steady employment, do well in school, remain healthy, and participate fully in community life.

Households Paying 30 Percent or More of Income on Housing in the Bay Area

Source: ABAG from US Bureau of the Census, American Community Survey 1-Year Estimates


Average Monthly Rent (1994–2014)

RealFacts, calculations by ABAG. Not adjusted for inflation

Calculations are based on data from RealFacts. Data includes only developments with 50 or more units. Not all jurisdictions are represented in the dataset. Rents are not adjusted for inflation because they are a key component within the CPI. As such, it would not be appropriate to use the CPI (or the rental or housing component of the CPI) to adjust housing prices.

These stresses do not affect all households directly, but cumulatively they negatively impact the region as a whole. Bay Area business leaders have consistently cited the high cost of housing as a barrier to hiring and retaining workers, threatening the region's economic competitiveness. Traffic congestion increases when people have to travel longer distances between available jobs and homes they can afford, making it harder for everyone to travel around the region and contributing to air pollution. The hours spent stuck in traffic take away from the time people can spend with their families and friends, and reduce the region's economic productivity. Demand for less expensive housing in outlying areas contributes to the loss of open space and agricultural land.

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Point Reyes

Although many in the Bay Area have focused on the recent crisis of rapidly escalating housing costs, in reality the region has faced a chronic housing affordability problem for a long time. The Bay Area consistently ranks as one of the most expensive housing markets in the United States. This is, in part, because of its economic vitality and high quality of life compared to other regions. And, it is also because the number of new homes added in the region over the last several decades has not matched the number of new jobs, resulting in an unmet demand for housing. This unmet demand pushes rents and prices upward, and makes it nearly impossible for low- and moderate-income households to find affordable homes, unless the homes have been built with public subsidy and are cost-controlled, or they are willing and able to commute by car over long distances. With the Bay Area's robust economy, any future job growth will likely result in continued high demand for housing.

Unfortunately, if this pattern continues, the region's housing affordability problem is likely to get worse. Structural changes in the economy mean the shares of high-wage and low-wage jobs are expected to increase, while the share of middle-wage jobs decreases. These trends indicate there will be an increased need for affordable and workforce housing. To address this challenge, the region needs tools and funding to produce more affordable homes and preserve the ones that already exist, while also protecting people from being displaced from their current homes.

Expanding choices to meet changing housing preferences

The Bay Area should also prepare for the evolving housing preferences of a changing population. Over the next several decades, the region's population is expected to become older and more diverse. A greater variety of housing types, such as apartments, condominiums, and townhouses, is needed to meet the housing needs of people at all stages of life. This could include seniors who want to stay in their community but are ready to give up the responsibilities of maintaining a single-family home or young workers who want to stay in the community in which they grew up but aren't ready (or can't afford) to buy a home.

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Already, Bay Area residents have shown a desire for more of these kinds of choices. Recent development trends show that most new homes in the Bay Area are apartments, condominiums, and townhouses—which complement the region's existing prevalence of single-family homes. This emphasis on multi-family housing is evident in both suburban and urban areas. In many cases, these homes are smaller, which helps to reduce greenhouse gas emissions by requiring less construction material and using less energy. Many of these new homes are located in PDAs and other areas near rail stations or bus stops, consistent with the goal of creating complete communities where homes are clustered in walkable, transit-served neighborhoods with many different shops and services. Developing in existing communities revitalizes these areas, capitalizes on existing investments in infrastructure and public transit, expands housing and transportation choices, and protects undeveloped lands.

ABAG's work related to housing choice and affordability

ABAG works with local governments, stakeholders from throughout the region, and state and federal policymakers to expand housing choices and increase housing affordability. These collaborative efforts focus on encouraging new housing—particularly more affordable homes—and protecting people from being priced out of their homes because of new development. To achieve these outcomes, ABAG advocates for increased State, regional, and local sources of funding to make homes more affordable and promotes more policies and resources to support preservation of existing affordable homes. ABAG also facilitates dialogue and information sharing among local governments and other stakeholders in order to enable coordinated action and provides data about housing planning, production, and market trends to inform these discussions.

Graphic: Holistic approach 
		to affordable housing. Two linked rings represent 'preserve' and 'produce.'
		PRESERVE (Keep existing homes affordable to community members: acquire and rehabilitiate affordable
		homes at-risk; advance new home ownership models; create supportive financing environment; link to 
		seismic and energy retrofits.) 
		PRODUCE (Increase overal housing supply at all income levels: simplify regulations; use available
		public land for affordable housing; expand funding at all levels; adopt proven policies.)


Build more housing, particularly in PDAs

Increasing the number of available homes, particularly in PDAs and other locations with good access to jobs and other opportunities, is key to addressing high housing costs and sustaining economic vitality. The locally designated PDAs are the places in the region where most growth is expected to occur. ABAG encourages local governments to plan for these areas to be complete communities that provide a range of housing and transportation choices in areas with easy access to jobs, services, shopping, and other amenities. Given the strong demand for housing in transit-served locations, it is also important for communities to preserve existing affordable units in these areas, and promote community stability by protecting existing residents from displacement due to development.

Diversify housing choices to meet the needs of the region's changing population: As the sizes and configurations of Bay Area families become more diverse, the region's housing choices will need to diversify as well. Since they are a large segment of the region's population, the choices that Baby Boomers make about housing will influence the options available to others. Seniors will need housing that allows them to remain independent and engaged in their communities for as long as possible, as well as facilities that can care for them compassionately when living independently is no longer an option. We need more homes that can comfortably accommodate multiple generations. And we need more homes to accommodate those seniors and younger generations alike who prefer more compact homes with access to urban amenities.

Repurpose under-utilized publicly-owned sites near transit and jobs: There are a number of public agencies—such as cities, counties, transit operators, and school districts—that own land in PDAs and other areas close to job centers and public transit. Given the regional importance of increasing affordable housing, these publicly owned sites offer a prime opportunity to develop housing in transit-accessible places where land prices have become too high for many affordable housing developers to effectively compete. Public agencies should identify unneeded or underutilized sites and prioritize affordable housing on these sites by passing ordinances that require inclusion of permanently affordable homes in any developments and/or give nonprofit housing developers or community land trusts the first opportunity to buy the sites.


Increase affordable housing options

Building more homes will help reduce the high costs of housing in the Bay Area. However, land and development costs are so high in the region that most new homes are not affordable to middle- or lower-income residents unless they are cost-controlled and were built with some public subsidies. These subsidies allow residents to pay rents or mortgages they can afford, and the homes have long-term deed restrictions to ensure they remain affordable to middle- or lower-income households in the future. Although the need for these types of affordable homes continues to increase, building them has become more difficult in recent years with the steady reduction of federal and state subsidies and the elimination of redevelopment agencies and their requirements for building affordable housing. To encourage construction of more affordable homes, we need to increase the subsidies available, improve local communities' understanding of and support for more affordable housing options, and promote regulatory changes to facilitate planning and building more affordable homes.

Increase funding and financing for affordable housing: To fill the growing need for subsidies, we need to identify additional funding mechanisms at the state, regional, and local levels. ABAG supports efforts by the State Legislature to create new funding sources for affordable housing. Ideas for regional solutions include a regional parcel tax or general obligation bond, an expansion of the Transit-Oriented Affordable Housing (TOAH) fund which currently helps finance affordable housing development, and a regional housing trust fund that could coordinate with sub-regional housing trust funds to pool locally-generated funding and leverage private investment. Some actions local jurisdictions can take include use of fees that link construction of new office space or market-rate housing to development of affordable homes or contracts that mandate additional community benefits on a case-by-case basis in particularly large developments.

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San Carlos

Build community support for affordable housing and housing affordability: As in other parts of the country, many people in the Bay Area perceive the need for affordable housing as something that affects just a few, select groups of people. However, with an economy that creates many high-wage and low-wage jobs with very few middle-wage jobs, there is and will continue to be a need in the Bay Area for deed-restricted affordable housing for many working households. ABAG can work with local governments, housing organizations, and other stakeholders to expand understanding among Bay Area residents about who benefits from affordable housing, the role it plays in sustaining communities and the regional economy, and strategies for successfully integrating affordable homes into existing neighborhoods.

Pursue State regulatory changes to support affordable housing: A court ruling in 2008 invalidated one popular affordable housing strategy, known as inclusionary housing, which requires developers of new market rate rental housing to include some affordable units in their housing developments. ABAG supports statewide legislative efforts to enable jurisdictions to use inclusionary housing policies for rental housing if they choose. In addition, while the California Environmental Quality Act (CEQA) provides valuable insights into the environmental impact of new development, it is often used as a tool to stop growth altogether. It is worth considering refining and expanding CEQA exemptions for affordable housing projects that meet strict environmental standards and are located near transit or jobs.

Who is Being Left out of California's Housing Market?

This list shows some of the occupations where the median income for workers in California is less than half of the State median household income of $28,150.

50% of State Median Household Income: $28,150

Job Category

Median Income in CA

Nursing Assistants


Security Guards


Janitors and Cleaners


Restaurant Cooks


Retail Salespersons


Home Health Aides




Source: California Housing Partnership Corporation Analysis of 2012 Bureau of Labor statistics and Census data, excerpted with permission from How California's Housing Market is Failing to Meet the Needs of Low-Income Families, Recommendations to the Leaders of the State of California, February 2014"

Develop local incentives to encourage affordable housing: Every community in the Bay Area has a role to play in providing sufficient affordable housing choices for the region's residents. There are a variety of tools and strategies available, so communities can find solutions that make the most sense for their size, location, and housing market. Jurisdictions should consider a full suite of options to build and preserve affordable housing including the acquisition, rehabilitation, and conversion of older buildings into affordable housing. Some might want to develop local funding sources for affordable housing or dedicate publicly-owned land to affordable housing. Others might give affordable housing developers exemptions from local development fees. Since many households are driving less and purchasing fewer cars, communities can also make housing less expensive by refining their parking policies to require less parking in places that offer alternatives to driving or by unbundling parking from rent and mortgage payments so residents pay for housing and parking separately and have the option of forgoing a parking space.

Remove barriers to providing housing, especially for the region's most vulnerable populations: Local communities should look for ways to make sure that regulations, development standards, and permit approval processes do not create barriers to developing affordable housing, especially supportive housing for residents with chronic disabilities.


Preserve affordable housing to maintain neighborhood economic diversity and stability

Considering how difficult and expensive it is to create new homes that are affordable to middle- and lower-income households, preserving existing affordable homes is an essential strategy for making the Bay Area a more affordable place to live. One strategy is to extend the affordability limits on homes when the deed restrictions are set to expire. Another approach is to acquire homes and convert them into affordable homes with deed-restricted limits on household incomes, which can help ensure homes remain affordable in places where the demand for housing is driving up rents and prices. This strategy increases the supply of permanently affordable housing, helps revitalize neighborhoods that have concentrations of aging rental housing, and can help prevent displacement of longtime residents.

Increase funding and financing resources for preservation: As with the production of deed-restricted affordable housing, funds for preserving affordable units (both deed-restricted and otherwise) are scarce. State, regional, and local governments should work together to identify funding sources and financing tools that facilitate affordable housing preservation. Currently, leaders statewide are discussing reform of the tax credit programs that enable the acquisition, rehabilitation, and conversion of small apartment buildings to permanently restricted affordable units. Another idea to consider is creation of a regional revolving loan fund program to provide financing for time-sensitive acquisition of properties for preservation. As Federal and State funding diminishes, we also need to identify new funding for the popular and effective home repair and rehabilitation programs operating in most cities and counties that enable seniors and others on fixed incomes to stay in their homes. Similarly, we should support programs to promote energy efficiency upgrades for low-income households, which benefit the environment and increase housing affordability by reducing households' utility costs. These programs are described in more detail in Section 3.

Promote alternative housing ownership models: The Bay Area will also need to be creative about the types of homeownership used to preserve the affordability of existing and future units. One promising strategy is community land trust programs where a community group buys land and holds it in perpetuity to keep the homes on it permanently affordable. Another option is to form cooperatives among existing tenants in smaller rental properties near transit or jobs, where both the owner and a majority of the tenants are willing to convert the units into a joint ownership property with permanent affordability.

Advocate for policies that encourage preservation: At the state level, California's housing element law only counts newly constructed homes toward a jurisdiction's mandated affordability goals. ABAG promotes reform of that law to ensure that jurisdictions receive the credit they deserve for other types of housing "production," such as the acquisition, rehabilitation and conversion of formerly market-rate units to deed-restricted affordable homes. ABAG also advocates that federal, state, and regional funds made available for natural disaster recovery require one-to-one replacement (or no-net-loss) for deed-restricted affordable housing units that are rendered uninhabitable as a result of the disaster.

Encourage local policies that preserve housing affordability and neighborhood stabilization: Local governments can consider a variety of policies to promote preservation of affordability and neighborhood stability in ways that fit their local context. Some options include limiting the number of rental homes that can be converted to condominiums, rent stabilization laws that limit the amount and pace of rent increases so renters are not forced out by rapid rent growth, and requiring one-to-one replacement of deed restricted affordable housing units that are damaged in a natural disaster or demolished for new development. Local communities should consider developing plans for how best to preserve at-risk affordable homes near transit or jobs.


Reduce housing and community vulnerability to natural disasters

As anyone who lives in the Bay Area knows, our region is susceptible to the effects of natural hazards such as earthquakes and flooding. If the damage from a disaster is severe, many residents will not be able to live in their homes. Right after a disaster, this can overwhelm temporary shelters and city services and can then lead to increased demand for temporary housing or rental housing. In a region where demand for housing is already high, the loss of many housing units might drive costs even higher. The impact of this disruption and potential cost increases would be a bigger obstacle for the most vulnerable people in the Bay Area, such as seniors and low-income residents, since finding housing that is affordable and near jobs, schools, medical facilities, and other services on which they rely would be challenging. This could lead to many people being forced to leave the region, which could permanently alter the demographics of a community and the region as a whole. The more we can protect our community services and infrastructure—particularly housing—from being disrupted by a natural disaster, the more likely it is that residents will be able to stay within their communities afterward, and the faster the region will be able to recover.

Reduce development in the highest hazard areas: One strategy for protecting our communities from the effects of natural hazards is to reduce the amount or type of development that occurs in the areas that are most at risk. Different areas of the region are susceptible to different risks, which include liquefaction, landslides, fault rupture, and flooding. To minimize these risks, local communities could avoid planning for dense uses in high hazard areas, and instead emphasize parks, open space, and light development in these areas. Some California laws already regulate construction in high hazard areas, such as near fault zones. Another option is to make improvements or changes to the land to reduce the hazard. This includes strategies such as soil densification in areas at risk for liquefaction or stabilizing hillsides to reduce the potential for landslides. It is also possible to construct buildings in ways that are more likely to withstand the effects of earthquakes or floods.

Retrofit fragile housing in seismic hazard areas: Certain types of homes are particularly vulnerable to damage in an earthquake. These include single family homes built before World War II, older multi-family buildings with open parking or retail on the ground floor, and those built (usually before 1970) from concrete that is not properly reinforced. Depending on the number of units, damage to multi-family housing can displace a large number of residents, many of whom are likely renters. To enable more residents to remain in their homes after a disaster, we should identify policies and funding tools to prioritize seismic retrofits for fragile homes in hazard areas. This is particularly important for multi-family housing, which does not always receive an equitable share of state or federal financial and technical assistance during recovery efforts and therefore may not always be rebuilt in a timely manner.

Fragile Housing in Flood, Liquefaction, and/or High-Shaking Areas

(Click image to enlarge)

Increase building standards for new construction in seismic hazard areas: The existing building code is designed to protect the lives of people in a building during an earthquake, but does not ensure that a building will still be usable once the shaking stops. We can minimize the disruption of daily lives and protect one of the world's largest economies by building schools, homes, and job centers to standards that will increase the likelihood that they will be repairable and reusable after an earthquake. The costs of building more resilient buildings can be recouped with lower losses costs related to damage and rebuilding after a disaster.

Plan for replacing affordable housing lost during a natural disaster: As noted earlier, many of the affordable homes in the Bay Area were built using public subsidies that have deed restrictions limiting the incomes of renters or owners. In most cases, local governments have not adopted explicit policies to replace these homes if they are damaged or destroyed by a natural disaster. Given the importance of these units to achieving housing affordability in the region, local communities should consider adopting a policy that requires one-to-one replacement (or no-net-loss) of deed-restricted affordable housing units damaged in a natural disaster. We should also advocate for equal access to funding, financing, and technical assistance for rebuilding and recovery of affordable housing after a disaster.

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Union City